Report: The EU never held Britain’s economy back

brexit european union

Reuters

Britain's economy is sluggish and unproductive, and will worsen with Brexit, according to a report from the Centre for European Reform (CER).

The report, authored by Simon Tilford, disputes claims made by those campaigning to leave the European Union that Britain's economy was "dynamic and flexible," and had "little to risk" from a Brexit.

Tilford argues that the UK's economic growth has actually been poor — we are no richer relative to the EU-15 average than we were 15 years ago, and the average Briton has to work more hours than the EU-15 average to achieve that income.

The EU-15 are the fifteen countries who were members of the EU prior to 2004.

Sluggish growth, terrible productivity

At a first glance, our growth in GDP over the last 15 years looks great, compared to our EU neighbours:

First inspection

Reuters

But to get a better picture of how an economy has performed, it is useful to look growth in GDP per capita:

Screen Shot 2016 09 26 at 16.39.23 (2)

Reuters

The UK's economic performance suddenly looks average because its population grew by 10% from 2001. Only Spain's grew faster. France's grew by 8%, Italy's flatlined and Germany's actually shrank by 3%.

However, it is when we turn to productivity that Tilford says the UK's reputation as a strong economic performer is "most clearly exposed as wishful thinking."

Here is the chart, which displays economic output per hour worked:

Productivity

Reuters

Britain's productivity began deteriorating in around 2005. As of 2015, it stands at just 90% of the EU average. That is a full 25% below French and German levels.

"Sustainable increases in living standards require economies to combine land, labour, capital and technology in ever-more efficient ways," Tilford argues.

"Britain has made a poor job of this."

The only reason that our GDP growth per capita looks respectable is because we work many more hours per year than our neighbours:

Screen Shot 2016 09 27 at 09.29.45 (2)

Reuters

Tilford's central argument is that the European Union is not to blame for the UK's woeful economic performance in the past 15 years.

"Boris Johnson is right. The EU has performed poorly for many years now. But contrary to conventional wisdom in the UK (to which Johnson subscribes) Britain has – on the most pertinent economic measures – managed to underperform even the EU," he says.

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