UK Economy Outperformance: Fact Over Fiction

When comparing the UK's economy to that of France, the narrative is often filled with speculation and predictions. However, focusing on the facts provides a clearer and more accurate picture of the current and future economic standings of these two countries.

The Importance of Fact vs. Prediction

The discussion about whether the UK will overtake France in GDP terms is often framed through the lens of foresight and prediction. Yet, the reality is more nuanced. Predictions come with numerous uncertainties, including economic policy changes, global economic conditions, and unforeseen events. Instead, focusing on current facts and recent trends offers a more reliable analysis.

Per Capita GDP: A Clearer Picture

One key point is that the UK's per capita GDP has outperformed France in recent years. This phenomenon is not due to the UK's economic performance being exceptional, but rather because France's economic performance has been notably worse. This data provides a more straightforward and less speculative indicator of economic strength.

In a specific context, the impact of Brexit on UK trade and economy has garnered significant attention. Despite the significant changes brought about by Brexit, the UK has demonstrated resilience. Notably, UK exports to the EU reached a record high in 2022, even after adjusting for inflation. This resilience is a testament to the adaptability of the UK economy. As David Owen from Saltmarsh Economics stated, 'We’ve basically adjusted to the new trade arrangements. Services are doing really well and that is a big surprise.'

UK's Economic Performance and Global Rankings

Several key metrics indicate the UK's robust performance in the global economic arena. For instance, since leaving the European Union, the UK has overtaken France to become the 8th largest manufacturer in the world. Additionally, the UK has surpassed Japan to become the 4th largest value exporter of goods and services globally. Furthermore, the UK's GDP growth rate has been the highest in the G7 in the first quarter of 2024, and it is forecasted to be the highest in Europe for the next year, with a growth rate of 0.7 percent as per the Office for National Statistics.

Despite these advancements, it's important to note that countries like Germany and France have experienced higher percentage growth compared to the UK and Italy. The International Monetary Fund (IMF) also projects that the UK will continue to grow faster than France and Italy in the coming years. Additionally, recent Purchasing Managers' Indices (PMI) from companies published by SP Global show that the UK is outperforming France and Germany in growth rates. Furthermore, the Bank of America's global fund manager survey indicates a shift of investment away from the Eurozone and into the UK, while Germany has seen a significant loss in jobs and an increase in unemployment.

Opinion Pieces Reinforcing the Trend

Several recent comments in the press further support the trend of the UK economy outperforming France. Tim Sarson, the UK head of tax policy at KPMG, has pointed out that the instability on the European continent and uncertainty over a potential second Trump presidency have benefited the UK, making it appear more stable and understandable. He mentioned that the UK is no longer seen as the 'sick man of Europe' and has gained increased confidence in Europe, particularly among other Europeans. Ambrose Evans-Pritchard, in a piece for The Telegraph, noted the narrowing of the UK's trade deficit and the potential reshoring of supply chains, which could indicate better economic performance. Lastly, James Athey, a fund manager at Marlborough, highlighted that investors are increasingly favoring the UK because the country does not lose on many fiscal metrics, such as fiscal responsibility, compared to other countries within the G10.

In conclusion, while predictions about future GDP rankings can be speculative, focusing on the current and factual state of the UK economy reveals its outperformance compared to France. The UK's adaptability post-Brexit, strong manufacturing sector, and better economic growth rates provide a clearer and more reliable picture than mere predictions or conjectures.