Saturday, August 04, 2012

British Growth Numbers Weaker Than They Look

British population figures for 2011 were finally added to the Eurostat database, and they showed an increase  in population by about 0.8%, slightly higher than the previous year. Population growth has been remarkably resilient, as other countries with weak economies, including Iceland, Ireland and Spain has seen sharp reductions in population growth both because of a drop in birth rates and because large scale net immigration was turned into large scale net emigration. Yet in Britain the high birth rate has remained more or less unchanged while net immigration has increased somewhat.

However, the relatively high growth in population also means that development in per capita GDP has been even worse than the headline numbers suggests. In the 2008-2011 period GDP fell by a cumulative 2.5% while population increased by 3%, meaning that per capita income fell by 5.3%. By contrast Germany who saw a 3% increase in GDP and whose population dropped by 0.5% saw a 3.5% gain in per capita income.  After adjusting for population, Germany's relative gain increases from 5.6% to 9.3% in just 4 years.