Recovery Comparisons: UK GDP Post-Pandemic and the Impact of Brexit

The Organization for Economic Cooperation and Development (OECD) has recently published its latest Economic Outlook, comparing UK GDP performance over the pandemic period with other major economies such as the United States, Canada, France, Italy, Germany, and Japan. The report shed light on a fascinating yet concerning trend in the UK’s economic recovery, triggered by various factors including Brexit.

UK GDP Performance and Global Comparison

The OECD report revealed that the UK now ranks 3rd for GDP performance over the pandemic, behind the United States and Canada, and ahead of France, Italy, Germany, and Japan. This comparison is based on Q4 2019 (pre-pandemic) levels with Q1 2022 (post-pandemic).

However, the situation is not as rosy as the aforementioned ranking might suggest. In the second quarter, the UK was the only country that had not returned to its pre-pandemic GDP levels. By the third quarter, the situation worsened, with the UK falling to the bottom of the charts. The report specifically noted that Q3 2022 UK GDP was 0.4% lower than its pre-pandemic level, significantly behind the Eurozone GDP, which was 2.1% higher, and the US GDP, which was 4.2% higher.

Interestingly, the report also pointed out that even Italy, known for its slower economic growth (often referred to as the “sclerotic” Eurozone), was performing better than the UK. Additionally, Japan, despite not having reported 3Q numbers, was well ahead of the UK as of the second quarter.

Impact of Brexit

The question arises: What factors have contributed to this poor economic recovery for the UK? The report suggests that while the UK faced unique challenges, Brexit appears to be the most significant contributing factor. It is difficult to point to other reasons that would have hurt the UK so badly within the 2019-2022 timeframe.

The war in Ukraine, a global event that has affected economies worldwide, did not particularly harm the UK as much as other countries, implying that there could be a positive impact on UK GDP. Similarly, the impact of the global pandemic (Covid-19) was widespread, but it is hard to explain why the UK’s GDP would perform worse than others in this context. This points to the specific challenges faced due to Brexit.

Conclusion

The OECD report paints a picture of a UK economy that, post-pandemic, has struggled to recover compared to its European and North American counterparts. While factors such as the war in Ukraine and the global pandemic have impacted economies, the distinct challenges faced due to Brexit appear to be the primary reason for the UK’s less favorable GDP performance. As the UK continues to navigate through these challenges, it is critical to monitor future economic trends and policies aimed at improving recovery from the pandemic.