Has rapid economic growth in the world’s high-income countries come to an end? If so, did the bursting of the bubble economy in 2007 mark the turning point? Alternatively, are we at the start of a new age of rapid growth fuelled by artificial intelligence? The answers to these questions are likely to do much to shape the future of our societies, since stagnant economies partly explain our bitter politics.
What then does the record look like and how far did it depend on unrepeatable opportunities? Here I will focus on the UK, as one of a number of countries struggling to recover dynamism. The UK has, in fact, been relatively undynamic since the second world war. Nevertheless, according to the Conference Board, UK real GDP per head rose 277 per cent between 1950 and 2023. Over the same period, US real GDP per head rose 299 per cent, French 375 per cent, German 501 per cent and Japanese 1,220 per cent. Cumulatively, standards of living have transformed.
Yet many people feel miserable. Part of the explanation for this is that growth rates have been falling. They were fastest between 1950 and 1973, the era of postwar recovery, lower between 1973 and 2007 and lower still between 2007 and 2023. Strikingly, this last period was the first in which US growth in both GDP per head and output per hour was higher than in France, Germany, Japan and the UK. Yet the level of US growth in output per hour was lower than it had been in the earlier periods.