So is size really that important? Well obviously when it comes to Christmas turkeys, but what else should it count in.
Over the past few months we have been regaled by all sorts of statistics from both Brexiteers and Remainers about the size and shape of the UK economy. Some of it no doubt was true. Some was also most certainly untrue. Then quite a lot was just rhetoric and hyperbole blurted out to try and achieve horrific headlines. It seems that since the Trump election, it has been fashionable to say that we are now in a ‘post facts era’. I am not sure that necessarily makes sense, but it does seem that politicians’ ability to be fast and loose with facts is far more acceptable than before. This is wrong, and frankly sloppy politics and weak journalism.
One area that seems to have suffered throughout all this has been the actual value of the UK economy, and especially when compared to our neighbours and competitors. Although, the recent ‘loss’ of some £6bn by the Office of National Statistics in their calculations must call into question some of the data we are being fed on a regular basis.
With this in mind, I thought it might be interesting therefore to do some comparisons between the various nations and try and get a better perspective of our different sizes and scales. Now, of course, as soon as you put down any data like this, it’s out of date, if only because the currencies for each nation will keep moving, but I hope at least it can give a reasonably useful impression.
Firstly I took the GDP, or Gross Domestic Product, which measures the value of the economy for each nation in US Dollars for easier comparison. Thus for Europe I found:
And then, out of interest, I added in:
At first sight there would seem to be few surprises here with the USA and China way out in front of the other individual economies. Meanwhile, the EU as a single unit is slightly ahead of China.
I think what is of interest is just how small the Russian economy is, given the general commentary we hear about the size and strength of the Great Bear. This gave rise recently to some particularly excited hyperbole when their ageing aircraft carrier steamed passed us. What happened is aptly covered by that wonderfully evocative poem Cargoes by John Masefield and which I have paraphrased here:
"Dirty Russian carrier with a salt-caked smoke stack, Butting through the Channel in the mad March days."
But, as we see, while Russia may be geographically huge, economically it is much more modest. A power… yes… and well-armed power at that, but certainly no super power.
Next though I wanted to look at the comparative value when evaluated against the size of each country’s population. These numbers were as follows:
So, if I then divide the GDP by the population, we get an idea of the wealth per million for each country’s population and that makes for some interesting reading.
The USA comes out, not unexpectedly, at the top of this list at $55.8bn per million of American souls. China, however, given its huge population only manages a mere $7.9bn. So, while it is large and growing rapidly, in terms of wealth per person it has a very long way to go before it becomes the wealthiest.
In Europe, Germany's powerhouse has a value of $40.8bn but – somewhat surprisingly – the UK is higher at $44bn. France trails in at $36.5bn. Despite our inferiority complex to the financial strength of Germany, we are in fact (on a per capita basis) wealthier. As for France, well it’s quite modest in comparison.
Perhaps the most revealing figure though is the paltry number that is Russia. For all its bluster, it has a value per million of just $9.1bn. So lots of land, lots of assets, but (as yet) not much in the way of of wealth per capita, and only slightly ahead of China, although probably only for the moment.
So fellow citizens of the UK, stand up and be proud of our value. Greater then we thought and certainly, at least on this measure, ahead of our German cousins. And the next time we see headlines of Russian military power being paraded in front of us, it would be good to recall that the value per head of their entire economy is less than one quarter of ours!
That is not a bad Christmas message for all of us.
Have a super holiday and here is to a hopefully prosperous, although no doubt eventful, New Year.
Justin Urquhart Stewart
Seven Investment Management
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