On economic outcomes, today the TUC released analysis showing:  

• The UK economy did worse than all G7 economies on both inflation and growth.  
• A majority of all advanced economies (19 of 36) did better on both measures than the UK. 

The analysis focuses on the two years of the cost-of-living crisis from the end of 2021 – when the Bank of England first raised interest rates – to the end of 2023 – the last quarter with data for all countries.  

The outcomes once again show conservative government policies as seriously wrongheaded.  While the coming monthly figures are likely to show inflation back at target, across the two years the UK has paid a much higher price than other countries in terms of growth. 

In fact, country results overall suggest that countries giving priority to growth were rewarded with lower inflation. Rishi Sunak’s logic may have been back to front: he failed on growth because he put too much emphasis on inflation.  

Over the two years to the fourth quarter of 2023, UK prices rose by 14.2 per cent (on the CPIH measure) and UK growth was 0.4 per cent. This poor performance is in contrast to other countries: 

• Overall G7 growth was 2.7 per cent with inflation of 10.7 per cent. 
• Of the G7 economies, the US performed best on GDP with growth of 3.8 per cent, and third best on inflation at 10.6 per cent.  
• Even the euro area saw growth of 2.0 per cent and inflation of 13 per cent.   
• Only five countries (Chile, Czechia, Estonia, Lithuania and Sweden) have done worse than the UK on both inflation and GDP. The worst of these was Estonia where GDP fell by 5.6 per cent and prices rose by 25.6 per cent.   
• Nine countries have done better than the UK on GDP but worse on inflation, and three have done worse than the UK on GDP but better on inflation.  

The full country figures are shown at the end of this commentary.  

The Prime Minister and his chancellor have ignored the experience of those countries who approached the cost-of-living crisis very differently. Above all they disregarded the expansionary policies of the US under the Inflation Reduction Act.  

Our analysis of country experience overall suggests on average those countries that took a more expansionary approach not only did better on growth, but did better on inflation as well.  The scatter plot below shows the highest inflation figures concentrated around lower growth and the higher growth figures more concentrated around lower inflation. Plainly the relation is not exact, but it is strikingly opposed to the conventional logic (note: the chart and analysis omits Turkey).