How the hard-working US is getting rich while the UK fights for benefits

“Thank God for the Americans.” The sigh of relief from Juliana Delaney, the head of Continuum Attractions, came just a few times last week after warning that the British were cutting back.

Continuum, which runs tourist attractions from the shores to Portsmouth’s waterfront, said Americans buck the trend of lower incomes and lower spending.

Delaney’s comments were revealing. The world’s largest economy has leapfrogged the UK and the rest of Europe on a series of economic moves since the 2008 financial crisis.

What started as a small disparity has grown into a chasm that has left Britain facing questions about whether it has the work ethic to close the gap.

behind not leading

Jeremy Hunt wanted to start the New Year by talking about growth. “The decline over Britain is just wrong,” the chancellor told an audience of tech chiefs and journalists in January.

A few moments later, he was celebrating that the UK was “in the middle of the pack” in the G7 growth league table. Production per hour worked is higher than before the pandemic, he boasted. At 1.6% above pre-Covid levels, economist Sam Bowman says it’s not something to celebrate. “We are not leading the world. We are trying to catch up.”

Noted author and economist Daron Acemoglu, whose book Why Nations Fail caused a sensation a decade ago, says the consequences of being “okay with mediocrity” and terrible productivity are enormous.

Getting more with less has always been the key to raising the standard of living. The ability to increase the amount of output per hour worked tells us how much the economy can grow without generating too much inflation.

When productivity grows, so do company profits and staff salaries. This leads to stronger growth, a larger economy, higher tax revenues, and lower bill loans.

“He The UK productivity problem it’s a disaster,” says Acemoglu. “This is an incredible economy that should be growing much faster, and doing nothing about it is the biggest risk.”

But Bowman’s concern is that the UK has fallen so far behind the frontier in terms of economic development that worrying about technological progress “doesn’t make much sense.” At worst, he adds, it is “a serious distraction.”

And the economic outlook is far from rosy. Living standards are on track for their biggest drop in two years since records began. The tax burden is also on track to reach a postwar peak. The UK’s long-term growth potential is waning. Economists warn of another decade of lost wage growth, while the Bank of England is poised to inflict more pain on borrowers with new increases in interest rates.

Ben Ansell, a political scientist at Oxford University, says that all of this matters at the ballot box.

Take Selby and Ainsty, for example, located a 90-minute drive from Rishi Sunak’s Richmond constituency in North Yorkshire. Many factors dyed the former mining constituency red in last week’s partial electionsincluding the economic context, says Ansell.

Selby is in the top 40 constituencies in England and Wales for the number of mortgage holders, with 35.9% of households still paying their own, according to the latest census data.

That puts rising interest rates on the minds of many voters, along with rising cost of living and rising gas prices (this is an area of ​​high car ownership and where the ratio of people ages 30-64 is above the national average).

All of the UK change to work between owners it’s been huge, particularly among those with large mortgages, says Ansell. In 2019, the Conservatives held a comfortable lead over Labor among all homeowners.

Today, all that has been erased. Labor has a 15-point advantage over the Tories among people with less than 50% of their mortgage remaining. Among those who own less than half, the advantage is 43 percentage points, he says, citing recent polls.