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| Britain |
| UK living standards outstrip US for first time in over a century |
| 2008-01-07 |
| Good for the UK, anyway! :-) [Ducking before the $hit hits the fan!] Living standards in Britain are set to rise above those in America for the first time since the 19th century, according to a report by the respected Oxford Economics consultancy. The calculations suggest that, measured by gross domestic product per capita, Britain can now hold its head up high in the economic stakes after more than a century of playing second fiddle to the Americans. It says that GDP per head in Britain will be £23,500 this year, compared with £23,250 in America, reflecting not only the strength of the pound against the dollar but also the UK economy’s record run of growth and rising incomes going back to the early 1990s. In those days, according to Oxford Economics, Britain’s GDP per capita was 34% below that in America, 33% less than in Germany and 26% lower than in France. Now, not only have average incomes crept above those in America but they are more than 8% above France (£21,700) and Germany (£21,665). “The past 15 years have seen a dramatic change in the UK’s economic performance and its position in the world economy,” said Adrian Cooper, managing director of Oxford Economics. “No longer are we the ‘sick man of Europe’. Indeed, our calculations suggest that UK living standards are now a match for those of the US.” Although many people will be surprised by the figures, Americans have long complained that average incomes have been stagnant in their country. One often-quoted statistical comparison suggests that in real terms the median male full-time salary in America is no higher now than it was in the 1970s. Oxford Economics says that while the comparisons are affected by sterling’s high value against the dollar, they also reflect longer-term factors. “The UK has been catching up steadily with living standards in the US since 2001 � so, it is a well established trend rather than simply the result of currency fluctuations,” its report says. It concedes, however, that a significant fall in the pound against other currencies would push Britain back down the ladder. It has assumed an exchange rate of just over $2 for the purpose of the calculation but in recent days the pound has slipped below that level. The Oxford analysts also point out that Americans benefit from lower prices than those in Britain. With an adjustment made for this “purchasing power parity”, the average American has more spending power than his UK counterpart and pays lower taxes. (In the run-up to Christmas many Britons travelled to New York and other American cities to take advantage of the strength of sterling against the dollar and those lower prices.) However, the British typically have significantly longer holidays than Americans as well as access to “free” healthcare. The figures may be of small comfort to Britons worried about house prices and facing a severe squeeze on their incomes this year as a result of record petrol prices and rising energy bills. Citigroup, which was the most accurate forecaster of Britain’s economy last year, predicts the slowest rise in consumer spending this year since 1992. “After the credit-fuelled boom in domestic demand and asset prices, the UK economy now faces a hangover, with slowing credit growth, falling property prices and tightening lending standards,” said Michael Saunders, its UK economist. Last week oil prices hit $100 a barrel, presaging a rise in petrol and diesel prices on the fore-courts. Npower, Britain’s fourth biggest energy supplier, announced that energy prices would go up sharply, raising the prospect of the average household bill rising above £1,000 for the first time. America overtook Britain economically in the final years of the 19th century, during the so-called second industrial revolution, which brought mass manufacture and sharply rising prosperity to the United States. |
| Posted by:gorb |
| #13 The millions of people immigrating into the U.S. to make a better life call BS on this one. |
| Posted by: Grumenk Philalzabod0723 2008-01-07 20:21 |
| #12 What's wrong with British food? I, for one, am very fond of Dal Makhani. |
| Posted by: eLarson 2008-01-07 15:41 |
| #11 BTW, did the Economist price the US Big Mac ($3.22) at Neiman Marcus? That's the price of Mac, fries and drink where I live. New York, San Fran and Chicago. |
| Posted by: Zhang Fei 2008-01-07 14:01 |
| #10 The Big Mac Index. BTW, did the Economist price the US Big Mac ($3.22) at Neiman Marcus? That's the price of Mac, fries and drink where I live. |
| Posted by: ed 2008-01-07 13:10 |
| #9 I think there's a good chance the British salaries have (barely) outstripped US ones, but British standards of living definitely have not. Consider, for instance, that Brits can pay for the roundtrip air ticket to NYC by buying day-to-day sundries at K Mart - such is the difference between prices in the UK and NYC (one of the more expensive places to buy such things). There's also the fact that you pay twice as much in the UK for meals that have portions that are half as large as the NYC portions. I suspect it's basically a thicket of EU protectionism, domestic regulation and tariffs that causes salaries and living costs to be so high. Since Brits aren't actually more productive than Americans, this will definitely put a crimp on their attractiveness as an investment destination for new plants and offices. |
| Posted by: Zhang Fei 2008-01-07 12:55 |
| #8 Did they account for the 12-20m "undocumented" aliens in the US, and if so, how? Did they account for our subsidy for their defen(c)(s)e, and if so, how? I suspect our defense budget allocated to UK purposes likely approaches or exceeds the cost of their health care system - do they get credit for that, or do we? Finally, given that whole taxation without representation thing, should the US taxpayer (i.e. ME) have a vote in British elections? Just a few questions. |
| Posted by: Chusong Grundy6409 2008-01-07 11:49 |
| #7 Somehow I don't think I'll be in a hurry to move to the UK anytime soon. That tax burden kills any "living standards" that you hope to have. |
| Posted by: DarthVader 2008-01-07 09:34 |
| #6 Sorry, it's just not true. It's by rather rubbish economist David Smith. |
| Posted by: Bright Pebbles in Blairistan 2008-01-07 09:33 |
| #5 Can they actually whistle past the graveyard through those rotten teeth? |
| Posted by: M. Murcek 2008-01-07 09:20 |
| #4 Oh, really. Maybe the Brits finances look better right now due to falling dollar vs. Euro, but don't tell me a society where Muzz have open call for prayers bleating five times daily in seven major cities and are now demanding same in Oxford, of all places, is a healthy and prosperous society. They are in extreme danger of losing their entire nation from internal rot. I just heard that Brits are sucking up property in Manhattan in record proportion due to exchange advantage and it is responsible for escalating values there while realty nationwide is falling. Are the wealthy already setting up safe havens so that they can bail out on their less well off compatriots after they have allowed this rot to occur ? |
| Posted by: Woozle Elmeter 2907 2008-01-07 08:57 |
| #3 I suspect they account for the dollar weakening. But if you account in house sizing, cars, electronic equipments and Britsih, err, food, yuck, I fear Britain is still far behind. |
| Posted by: JFM 2008-01-07 08:56 |
| #2 The calculations suggest that, measured by gross domestic product per capita, That's very deceptive. What's the tax burden and disposable income after that 'per capita'? The following are facts about persons defined as "poor" by the Census Bureau, taken from various government reports: — Forty-six percent of all poor households own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and porch or patio. — Seventy-six percent of poor households have air conditioning. By contrast, 30 years ago, only 36 percent of the entire U.S. population enjoyed air conditioning. — Only 6 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person. — The average poor American has more living space than the average individual living in Paris, London, Vienna, Athens and other European cities. (These comparisons are to the average citizens in foreign countries, not to those classified as poor.) — Nearly three-quarters of poor households own a car; 30 percent own two or more cars. — Ninety-seven percent of poor households have a color television. Over half own two or more color televisions. — Seventy-eight percent have a VCR or DVD player; 62 percent have cable or satellite TV reception. — Seventy-three percent own a microwave oven, more than half have a stereo, and a third have an automatic dishwasher. Overall, the typical American defined as poor by the government has a car, air conditioning, a refrigerator, a stove, a clothes washer and dryer, and a microwave. He has two color televisions, cable or satellite TV reception, a VCR or DVD player, and a stereo. He is able to obtain medical care. His home is in good repair and is not overcrowded. By his own report, his family isn't hungry, and he had sufficient funds in the past year to meet his family's essential needs. While this individual's life is not opulent, it is equally far from the popular images of dire poverty conveyed by the press, activists and politicians. Even better news is that remaining poverty can readily be reduced, especially among children. Child poverty in the U.S. is caused largely by low levels of parental work and by the absence of fathers from the home. While work and two-parent families are the surest ladders out of poverty, the welfare system continues to reward idleness while failing to provide support to keep families in tact. The Specter of Poverty in America, Tuesday, September 21, 2004, By Robert Rector |
| Posted by: Procopius2k 2008-01-07 08:46 |
| #1 I smell rats here. I think they are measuring gross income, based on GDP. However, if you look at net income, after taxes, I suspect there is hanky panky going on. For example, counting *theoretical* government benefits as "income". That is, *theoretically*, all Englishmen have dental care, so that counts in their income. |
| Posted by: Anonymoose 2008-01-07 08:37 |