The United Kingdom, once the heart of a global empire, now finds itself in an unenviable economic position when compared to the United States. Trump and Musk want Canada and are eyeing up the UK.
If the UK were a state within the US, its economic metrics suggest it would rank as the poorest or near-poorest state by GDP per capita and overall economic performance.
GDP per Capita: The Defining Metric
GDP per capita provides a critical measure of the economic output of a nation or state relative to its population. In 2024, the UK's GDP per capita is approximately $47,000. To put this in perspective:
- Mississippi, the poorest US state by GDP per capita, stands at $48,000. Take out London from the UK and the gap is wider.
- The US national average GDP per capita is around $80,000, with wealthier states like Massachusetts exceeding $100,000.
This means that if the UK joined the US, it would rank below Mississippi in GDP per capita—a striking revelation that underscores the UK’s lagging economic productivity.
GDP Comparison
The UK’s nominal GDP, estimated at $3.7 trillion in 2024, makes it the world's sixth-largest economy. However, when compared to US states, the UK’s overall GDP doesn’t hold up as well. For example:
- California, the largest US state economy, has a GDP of over $4 trillion, despite a smaller population than the UK.
- Texas, with a GDP of $2.9 trillion and a population of 30 million, produces significantly more GDP per capita than the UK.
California and Texas represent just two examples of US states that outpace the UK both in absolute GDP and per capita terms, illustrating the scale of disparity.
Labour Productivity: A Key Weakness
Labour productivity, a critical driver of economic growth, also highlights the UK's struggles. According to OECD data, the average UK worker produces 20% less output per hour than their American counterparts. The UK's productivity not only lags behind the US but also trails European peers such as Germany and France.
Household Wealth and Incomes
Incomes and wealth further highlight the UK’s economic lag:
- The median household income in the UK is approximately $36,000. In the US, the national median household income is over $70,000, with states like Maryland and New Jersey surpassing $90,000.
- Even poorer US states like West Virginia and Mississippi report median household incomes close to the UK average, while the cost of living in many of these states is significantly lower.
Healthcare Spending as a Proxy for Investment
Healthcare expenditure per capita provides an indirect measure of a country’s ability to invest in its citizens. The UK’s National Health Service (NHS) spends roughly $5,500 per capita annually, while the US averages over $12,000. Although the NHS is celebrated for efficiency, the disparity in investment reflects broader resource constraints within the UK’s economy.
Inequality and Regional Disparities
The UK’s wealth inequality and regional economic disparities mirror, and often exceed, those in the US. London significantly outpaces other regions in economic performance, with per capita GDP nearly double that of the North East. In a US context, this would resemble California pulling away from Mississippi but without the robust mechanisms for wealth redistribution seen in the US federal system.
Why Has the UK Fallen Behind?
Several structural factors explain the UK’s underperformance relative to the US:
- Chronic Underinvestment: The UK invests less in infrastructure, research, and development as a percentage of GDP compared to the US.
- Education Gaps: The UK’s educational outcomes, particularly in STEM fields, lag behind US benchmarks.
- Productivity Challenges: Weak productivity growth remains the Achilles’ heel of the UK economy, exacerbated by reliance on low-paid, low-productivity jobs.
Lessons for the UK
The comparison with US states is not merely an exercise in statistical curiosity. It underscores the urgent need for the UK to address its economic malaise:
- Boosting Productivity: Investing in skills, technology, and infrastructure is critical to bridging the productivity gap.
- Reversing Brain Drain: Encouraging high-skilled workers to remain in or return to the UK is vital to driving innovation. The best way to do this is to tax all off-shore British citizens on their income like the US does with it’s citizens. It’s why Musk has not left for Spain.
Conclusion
While the UK may pride itself on its history, its economic present reveals a nation struggling to keep pace with global and even state-level competitors. If it were part of the US, it would be the poorest state by GDP per capita, a startling realisation for one of the world’s leading economies. The UK’s challenge now is to learn from more successful economies, invest in its future, and reclaim its place as a global economic leader—not just a historical one.
The UK’s potential remains immense, but the gap between its promise and its performance has rarely been wider.
