No longer in the same club as America, France or Germany, commentators are now comparing Britain to Italy—known for political drama, economic stagnation and nervous bond markets
Save time by listening to our audio articles as you multitaskBoth Britain and Italy have an economic-growth problem that stems from underinvestment and lacklustre productivity, which in turn reflects deep-rooted structural factors. But Italy’s disease is considerably more advanced. Its living standards, measured by realper person, have not risen since 2000. That in part reflects an ageing population.
The malaise is apparent in stockmarkets, too. As companies elsewhere, chiefly in America and China, have innovated and swelled, Britain’s stockmarket has shrunk in importance. Its share of global market capitalisation has fallen from 8% to 3% over the past 20 years. Its importance in Europe’s total market value has declined, too. Italy’s share of the world’s stockmarket was never as big as Britain’s was, but it has shrunk at a similar pace.
Both countries have serious regional imbalances. In Italy, the richer manufacturing-oriented north has long left the south in the dust. In 2019per person in the south was about half of that in the north. Britain is also unbalanced, with output per worker in London around 70% higher than that in the north-east of England. It is possible to construct lots of other measures of regional inequality, depending on the size of the region and the measure of income used.
When it comes to the countries’ financing positions, however, the picture is more complex. Italy has high net public debt, of around 138% ofin 2021. Its slow economic growth means that those debts risk becoming unsustainable. Moreover, it is a member of a currency union with shared monetary policy, which means it cannot benefit from a weaker currency to boost its economy or prevent a run on its public debt.
Danmark Seneste Nyt, Danmark Overskrifter
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