Less a ‘miserable failure’?: some facts about recent EU growth
This morning I woke to a Brexit mantra that the EU economy is a “miserable failure”, with “low growth”. (*)
On the latest GDP quarter-on-quarter growth figures, in 2016Q1 the EU moved marginally ahead of other economies regarded as important in this type of comparison.
GDP: quarterly growth, per cent
Over the past year, US gains have been grinding to a near halt, Japanese growth is weak and volatile, and the UK is now more subdued.
Data for the individual countries of the OECD give a fuller picture of recent developments; the below figures are for four quarter growth, which is less volatile. These compare growth in the latest quarter with growth in 2014Q3, corresponding to when US growth peaked (and also to policy – see below). Since then, very broadly, EU growth has picked up a little and other countries’ growth come off a little.
GDP, four quarter growth
(*- indicates EU country; Ireland growth in 16Q1 is cut off, the actual figure is 9.3%)
In terms of the change in growth the EU/non-EU split is very similar – 11 of 16 (69%) countries where growth accelerated are EU countries; 11 of 18 countries (61%) where growth slowed were EU countries.
On the basis of the aggregate country groupings, growth is now virtually identical for EU countries (1.85%) and OECD countries (1.89%), with the EU up 0.55 percentage points since 2014Q3 and the OECD up 0.05 ppts.
Non-OECD countries are performing a little less well, and EU countries a little less badly. But obviously average growth of just below 2 per cent is not good enough. (And some individual country outcomes are still tragic, not least Greece.)
On the basis of the latest growth outcomes, the EU is no more a ‘miserable failure’ than other advanced (OECD) economies. The problem has been with policy (see also here). With an expansionary policy, the EU has moved forward. Though, with growth still hardly stellar and so much lost ground to make up, there are significant deflationary pressures, and fiscal policy plainly needs to be brought into play in a very big way. Conversely with, for example, the pre-election stimulus ended in the UK and the tightening of policy in the US (first through reducing QE and then the interest rate increase), prospects elsewhere have diminished.
As these recent outcomes illustrate, policy dilemmas and errors are far from exclusive to the EU. We should vote for what Europe could be, not what it is.