A huge untold story of the world today is how far Europe has fallen behind the US economically in recent decades:
Here are the 2019 numbers (in 2019 dollars, again World Bank) US: $65,297. UK $42,330. That’s 35% less than the US. Or, the US is 54% better off than the UK.. France: $40,494. Italy: $33,228 That’s 50% less than US. Or the US is 96% better off than Italy. China: $20,261.
And it’s been getting steadily worse. France got almost to the US level in 1980. And then slowly slipped behind. The UK seems to be doing ok, but in fact has lost 5 percentage points since the early 2000s peak. And Italy… Once noticeably better off than the UK, and contending with France, Italy’s GDP per capita is now lower than it was in 2000.
So why is this happening? Regulation and lack of investment in IT in the services sector are chief suspects.
I definitely noticed this difference when I went to Paris for the first time in the fall of 2019. I was expecting a gleaming city, but I was surprised at the poverty I saw. There were panhandlers at the airport, which I’ve never seen in the US, and a lot of crumbling buildings and down-and-out people. It was rather sad. However, I enjoyed my time there a great deal, and would recommend their delicious food and superb art highly.
With the vaccine rollout in Europe going far more slowly than in the US, I think they will fall much further behind, and quickly. Other parts of the world will be wide open while they’re still locked down.
On the bright side, this could provide a great opportunity for the UK to catch up, since it has outpaced the US, China and almost every other country worldwide on vaccines. Their speed and innovative policies, like delaying second doses of vaccines, have impressed me a great deal.
For more on the economy and financial markets, check out these posts:
- This One Trend is Driving Every Financial Market
- Forget GameStop, Treasury Yields Are The Thing to Watch
- Australia Takes the Lead As Governments Move to Reign in Interest Rates
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