The UK government has announced a bold plan to achieve the highest per-capita economic growth among G7 nations for two years in a row, aiming to reverse its recent economic struggles.
If successful, this would mark a significant turnaround from Britain’s recent performance, where it has lagged behind other G7 countries in per-capita GDP growth. Over the past decade, the UK often found itself in the middle of the pack, and by early 2024, real per-capita household incomes were still below late 2019 levels.
This announcement follows a landslide victory for Prime Minister Keir Starmer’s Labour government. Starmer, along with his finance minister Rachel Reeves, has promised to tackle the UK’s long-standing issues of weak productivity and low investment. On Monday, Reeves revealed major reforms to the planning system, which are expected to boost economic activity.
According to historical data from the OECD, the UK has never topped the G7 rankings for per-capita GDP growth for two consecutive years. The closest it came was in the early 2000s, leading in 2001 and 2003. Achieving this goal now would not only signal an economic revival but also improve living standards across the country.
In the first quarter of 2024, the UK’s per-capita economic growth increased for the first time in two years, reversing a trend that had left per-capita GDP stagnant for six years. Starmer aims to boost overall economic growth to around 2.5% annually, similar to the pre-financial crisis average. Current forecasts predict the UK economy will grow by around 1% this year, but stronger-than-expected growth in May suggests there may be potential for higher growth.
Labour’s pre-election commitments included this specific per-capita growth target, highlighting their focus on economic reform. Success in this endeavor could elevate the UK’s standing within the G7 and herald a new era of prosperity for its citizens.
photo source: Google
By: Montel Kamau
Serrari Financial Analyst
12th July, 2024
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