Liz Truss’s new Growth Commission has claimed that the average American’s income is a third higher than the average British person’s as a result of stagnant growth in the UK.
In a report, the group claims that the difference between incomes across the Atlantic equates to £10,000 a year for an individual’s spending power or £24,000 a year per household.
It also warns of a relative slowdown of growth among G20 countries, particularly those in western Europe, and says that the UK is one of the few international economies where GDP per capita is falling post-Covid.
The report is the latest challenge to Rishi Sunak and Jeremy Hunt’s economic policy from the group, convened by former prime minister Ms Truss.
i reported on Tuesday that the commission is proposing an alternative method of forecasting the effect of tax and spending changes on the UK’s finances.
Ms Truss has established herself as a campaigner for lower taxation to boost growth since she was forced to resign in October following a disastrous mini-Budget.
Douglas McWilliams, an economic consultant and the Growth Commission’s co-chairman, said that low growth had become the “new normal” in many countries including the UK.
“But in a cost of living crisis, especially in the UK, the impact of this stagnation couldn’t be clearer,” he continued.
“Low growth hits everyone in the pocket. There is no escaping that and governments around the world need to be serious about tackling this issue.”
Fellow co-chairman Shanker Singham, an international trade and competition lawyer and economist, said there was “endless evidence for how consistent policy decisions around the world have led to this crisis of low growth.
“Failure to act will see us miss out on the opportunities presented by huge technological advances that we have seen especially over the last twenty years.”
He said the Growth Commission wanted to “lay the issues bare for people and policymakers to see,” and promised a “fruitful, non-partisan exploration of the reasons behind this crisis”.
In its report, economists appointed by the group argued that a GDP per capita growth rate of 3 per cent over the next two decades in the UK would allow the economy to grow by 65 per cent and would give each Briton £15,000 more to spend on average.
UK GDP per capita has grown by only 10 per cent since 2015, compared to 24 per cent for Germany and 18 per cent for France.
Forecasts in the Spring Budget predicted GDP per capita in the UK would fall by 0.8 per cent in 2023, before increasing by 1.3 per cent in 2024 and 2 per cent in 2025.
The Growth Commission brings together 13 economics to produce alternatives to the forecasting methods used by the Government’s official budget watchdog. Its formal launch is set for Wednesday.
It was founded by Ms Truss, who has been highly critical of organisations such as the Office for Budget Responsibility (OBR) and Institute for Fiscal Studies (IFS).
Both these have warned previously against tax cuts, such as those announced in her mini-Budget, over fears they would lead to increased borrowing.
Responding to the Growth Commission’s latest report, a Downing Street spokesperson said: “We’ve never listened to one single source on this, and you’ll know the Chancellor hears from a range of voices and has indeed advisers who provide advice to the Treasury from the world of economics and business.”