Is the UK economy growing four times slower than the US?

Published: 29th Apr 2013

"Since George Osborne's last spending review in autumn 2010 the USA has grown more than four times faster than Britain — by 4.9% compared to just 1.1% here. And while the US economy is now 3.2% larger than its pre-crisis peak we are still 2.6% smaller as we suffer the slowest recovery for over 100 years." Ed Balls, Labour party website, 26 April 2013

Last week we learnt that our country narrowly avoided falling into a triple-dip recession, with official figures showing GDP growth of 0.3% since the last quarter of 2012.

While this might seem like good news, Shadow Chancellor Ed Balls warned that the wider picture remained bleak, with the UK economy suffering the slowest recovery for over 100 years. Does he have a point?

The long and winding road to recovery

The National Institute for Economic and Social Research (NIESR) keeps tabs on the progress the economy is making in recovering to the peak level of output hit before the recession hit, and how this recovery compares to previous economic downturns.

We can see from their chart that during previous recessions the country has generally returned to its pre-recession peak between two and a half years and four years after the growth figures first turned negative.

However NIESR notes that the current recession (shown in black) started over five years ago, making this "over a long perspective ... the slowest post-recession recovery in output in the past one hundred years," as the Institute's director Jonathan Portes puts it in his blog, a position which chimes with Ed Balls' claims last week. 

The last three years of economic growth

But, zooming in, how has the country's economy fared since George Osborne's first Spending Review in autumn 2010? According to the Shadow Chancellor, we've been lagging behind other countries: he claims that the USA has grown more than four times faster than the UK, "by 4.9% compared to just 1.1% here."

Is he right?

We've looked at OECD figures on quarterly economc growth beginning from the last quarter of 2010 up to the first quarter of 2013. We indexed them to show percentage growth in GDP over the period and found that in this specific space of time the UK economy did grow by 1.1%, while the US grew by 4.9%.

Economic growth among the G7 economies

What this doesn't tell us is how typical the USA is as a point of comparison. Is the economy across the pond performing particularly well, or is it we that are under-performing?

To get the bigger picture, we charted growth figures from all G7 countries - as well as the G7 and OECD average - over the same period used by Mr Balls, though it's important to point out that we only have growth figures for the first quarter of 2013 for the US and the UK, whereas they haven't been updated since the last quarter of 2012 for the other countries.

Despite this, the graph below does give us a clear idea of how other economies have been fairing over the last three years. 

This suggests that it is both relatively strong growth in the US and relatively weak performance on this side of the Atlantic that is responsible for the gulf in GDP growth over the past three years.

The UK's growth only tops that of Italy and Japan, which are the only G7 countries to still have a smaller economy now than they did in 2010. The US meanwhile finds tself well above all the oter G7 nations, with only Canada keeping up with the pace of its growth.

 

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Flickr image courtesy of gavjof


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