Wednesday, January 9, 2008

Better Standard Of Living In UK?

Standard Of Living In UK Better Than In USA

By Lucy Cockcroft | 9 January 2008

For the first time in more than a century the standard of living in Britain is higher than in America, according to a new report. Analysts at the respected Oxford Economics consultancy say that increasing incomes, free healthcare and longer holidays make the average Briton better-off than his or her US counterpart.

The GDP per head in the UK is expected to exceed that of the USA in 2008

They predict that gross domestic product (GDP) per head in the UK, an indicator of average incomes, will be £23,500 in 2008, compared with £23,250 in America, reflecting the strength of the pound against the dollar and the steady growth of the British economy. Adrian Cooper, managing director of Oxford Economics, said: "The past 15 years have seen a dramatic change in the UK's economic performance and its position in the world economy. No longer are we the 'sick man of Europe'. Indeed, our calculations suggest that UK living standards are now a match for those of the US. The UK has been catching up steadily with living standards in the US since 2001, so it is a well-established trend rather than simply the result of currency fluctuations."

Back in the early 1990s Britain's GDP per capita was 34 per cent below that in America, 33 per cent less than in Germany and 26 per cent lower than in France. Now, average incomes are not only above those in America but they are more than 8 per cent higher than in France where it is £21,700 and Germany, with a predicted £21,665. The British financial services boom and soaring house prices have led to an uninterrupted expansion, credited with boosting the UK's strength. And in contrast America and many European countries slid into recession in the early part of this decade.

However the average British person may not feel richer than their US cousins as goods and services there [in the U.S.] are often vastly cheaper. So, despite earning less, the average American can buy more.

The report authors also warn that a significant fall in the pound against other currencies could push Britain back down the ladder. Citigroup, the most accurate forecaster of Britain's economy last year, predicts the slowest rise in consumer spending this year since 1992.

Michael Saunders, Citigroup's UK economist, said: "After the credit-fuelled boom in domestic demand and asset prices, the UK economy now faces a hangover, with slowing credit growth, falling property prices and tightening lending standards."


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