Fact Check: does only the economy of Antarctica grow slower than the EU’s?
Professor Keith Pilbeam reviews article by Dr Jonathan Perraton, University of Sheffield
The EU has been a disaster for jobs. Only Antarctica has lower economic growth.
A tweet from the Vote Leave campaign on June 16.
It is hard to know what to make of the claim from the Vote Leave campaign about Antarctica, as that continent has virtually no economic output. But the claim is simply false: the Latin American continent has lower growth than the European Union, according to the latest figures from the International Monetary Fund’s World Economic Outlook.
The fastest growth in the world continues to be in emerging Asia – China, India and others. But comparing continents’ performance is not particularly illuminating. Continents are geographical rather than economic areas – Asia, for example, includes countries as diverse as Nepal and Japan.
The leading rich, industrialised economies have been mired in weak economic performance since the 2008 financial crisis. Comparing Britain’s relative growth to the other leading G7 economies shows that it has been doing relatively well recently. Yet, poor performance is not confined to the eurozone, with Japan in particular continuing to experience very weak growth.
Although recent British economic performance has been relatively strong, over a longer horizon, it has not been impressive. The UK went into recession in 2008 at the start of the financial crisis. The recovery from this – the time taken until the economy returned to output levels before the recession – was the slowest since the 19th century at least. This is simply in terms of total GDP: the UK economy grew in part because the working population grew, including from immigration. The Office of Budget Responsibility has estimated that net migration into the UK has added around 0.5% to potential growth.
Real GDP per person did not reach pre-financial crisis levels in Britain until 2015. So taking the period since the onset of the 2008 financial crisis, British economic growth has been disappointing.
It has been the case that performance by eurozone countries has been relatively weak, and a number of Western European economies that have remained outside the euro have done relatively well. However, the referendum is on membership of the European Union and not the eurozone and Britain retains an opt-out from the eurozone.
Although eurozone performance has been weak overall, particularly among the crisis-hit southern European economies, this is not universally the case. In particular, in contrast to Britain’s slow recovery from the 2008 financial crisis, Germany had completed its recovery from that recession by 2011.
The UK current unemployment rate of 5% is the lowest since October 2005, but Germany’s unemployment is only slightly higher at 6%, a figure that is lower still in the areas of the country that were formerly West Germany.
Growth in the European Union remains weak – but this is true across developed economies and it is not the worst performing area in the world. British growth is relatively high by developed country standards, but its recovery since the 2008 financial crisis has been weak. Antarctica doesn’t have an economy so it doesn’t even figure.
Keith Pilbeam, professor of international economics and finance, City University London
The claim from Vote Leave relates to both output and jobs. Antartica has a summer population of 4,000 and winter population of 1,000, so it is probably not the best region to compare the EU population of 508m inhabitants against.
As the graph using IMF figures shows, GDP in Latin America and the Caribbean grew slower than the European Union in 2014 and 2015, although the EU did grow slower in 2013 - at 0.3% compared to 3% for Latin America. The Commonwealth of Independent States, the countries of the former Soviet Union, grew at a generally slower rate too: 2.1% in 2013, 1.1% in 2014 and -2.8% in 2015.
When it comes to unemployment, comparisons are harder. According to the OECD’s harmonised unemployment rate, for the European Union of 28 countries it was 10.2% in 2014 and 9.4% in 2015. For the United States the figures were 6.2% in 2014 and 5.3% in 2015. Lower US unemployment is normally attributed to its more flexible labour markets. Of course, there are large differences between EU countries – as there are between different states in the US.