Britain is far poorer than people think
Most Brits do not realise they are poorer than the average Americans, Swiss, Australians or Singaporeans. When asked to rank the UK among 50 US states on GDP per capita, on average people placed the UK 7th, richer than 43 states. The truth is far more miserable – we are last, says Callum Price
There’s a school of thought building in Westminster policy and political circles – and beyond – that for things in the UK to get better, they first must get worse. The logic is that voters are not yet ready to embrace the radical changes that are necessary to fix our malaise; the medicine required does not yet have the requisite spoon full of sugar to go down.
Look at Argentina, where there is currently underway the sort of economic revival that politicians dream of delivering on the back of fundamental free market reforms. But pre-Milei, Argentina was wrestling with inflation in the triple figures – do we have to get there before we can take our own chainsaw to the state and unleash the market to deliver the prosperity we want and need?
Possibly not. Major new opinion research published this week by the Institute of Economic Affairs by Freshwater Strategy shows that the British public overwhelmingly want growth. Two thirds think that the UK is heading in the wrong direction, and 87 per cent said that we should focus more on economic growth, against just nine per cent that said the UK is already wealthy enough.
These figures make one thing abundantly clear: the de-growthers have lost. Growth is valued by all demographics, groups and age ranges, and across the political divide. Voters for all the five main political parties held the UK economy growing as an important goal: between 79 per cent (Green Party) and 96 per cent (Tories and Lib Dems). There is no appetite to cash in our winnings and call it a day – not least because after an average annual growth rate of just 1.5 per cent for almost two decades, few people feel like they have won.
More than two thirds, 65 per cent, rate the economy as poor, 46 per cent believe it is contracting. One focus group respondent stated “the country is going downhill so fast”, while another asked “why is everything getting more expensive when my pay isn’t going up?“.
People tended to blame a range of factors for the economy’s problems, from market-first explanations like high taxes and too much red tape, to state-led explanations like lack of government investment and companies prioritising short-term profits. This is the kitchen-sink problem, people are willing to do anything to get growth.
This is the kitchen-sink problem, people are willing to do anything to get growth
When asked what they thought would deliver growth going forward, 77 per cent backed lower energy costs, 66 per cent backed reducing taxes on business, 59 per cent making it easier to build, and 58 per cent reducing red tape. Positive results for those who understand prosperity comes not from the state but from the market.
What does GDP growth actually mean?
There is low comprehension for exactly what ‘GDP growth’ means, and scepticism about who the primary beneficiaries would be, but when communicated in terms of the benefit growth can deliver for them and their families, support increased further.
What was particularly interesting about people’s attitudes was how they thought the UK economy stacked up internationally. Despite their huge pessimism about how the UK is doing, people still vastly overestimated how prosperous we are relative to other countries. Most Brits do not realise they are poorer than the average Americans, Swiss, Australians or Singaporeans. When asked to rank the UK among 50 US states on GDP per capita, on average people placed the UK 7th, richer than 43 states. The truth is far more miserable – we are last.
The good news is this: when this was revealed, people reacted with shock, surprise, and anger – which garnered a visceral sense that something had to be done. “It suggests that there needs to be change in the UK because we can’t be 51st, there’s no way” one voter said. Therein lies the hope for those who are unwilling to settle for stagnation and want to build a platform for change and growth.
The ball then falls into the court of the politicians. There is a growing platform for a serious plan to deliver growth here, one that only strengthens when the truth state of our economy is spelled out. There is no appetite for de-growth narratives, nor any appreciation for claims that things are turning around, because people can see that they aren’t. Our political class needs to stop proclaiming 1.5 per cent growth as progress, and start getting serious. The solutions and the platform are there, and to the political leaders ready to grasp the opportunity will go the electoral spoils.
Callum Price is director of communications at the Institute of Economic Affairs