Monday, September 12, 2005

British prosperity on par with the poorest US states

Fraser Nelson:

GREAT BRITAIN's steady slide down the world prosperity league tables has left it on a par with the poorest American states and cities, according to new research by the US Statistics Bureau, an official federal agency. Its findings will be seen as a fresh blow to Chancellor Gordon Brown's claim that his model for the British economy is succeeding and comes as 170 national leaders meet in New York this week to discuss poverty.

Britain would be considered the fifth-poorest state in the United States and the average citizen of central London earns significantly less than his counterparts in comparatively deprived American cities such as Detroit and New Orleans, the research reveals. While the worst US poverty remains more acute than the worst British poverty, partly because of more generous welfare provision in Britain, those on the second-lowest rung of the prosperity ladder are far better-off than their British counterparts - and would be considered middle class in the UK.

In its latest poverty report, the US Statistics Bureau gives a breakdown of incomes across all social groups, states and cities in America - allowing a full comparison with equivalent figures in Britain. If New Orleans were to be in Britain, it would be by far its richest city as ranked by disposable income after tax and benefits. The average income in New Orleans before Hurricane Katrina was the equivalent of £19,980 (E29,570, $36,763) in 2003 - far higher than in inner London, Britain's richest area, where average incomes are £16,430. If each of the 50 US states were an individual country, 45 of them would be richer than Britain in terms of gross domestic product (GDP) per head.

UK GDP was $26,800 per person last year; Alabama's was $28,007 and Louisiana's $29,516 per person. In 2003, the UK average disposable income (after tax and benefits) was £12,610 a year, lower than in any American state and on a par with the poorer suburbs of its poorer cities.

In Mississippi, which comes bottom of almost all US wealth tables, the average citizen took home the equivalent of £15,600 in 2003. This is meagre by American standards and almost half that of Connecticut's average income of £28,500. But average income in Mississippi towers over that of even well-to-do English areas such as Buckinghamshire, where disposable income was £14,800 in 2003, Hampshire (£13,060) and Kent (£12,903).

The poorest UK area is Tees Valley & Durham, which includes Tony Blair's parliamentary constituency of Sedgefield. Average income there was £10,743 in 2003, almost half that in New Orleans. Neither the British or American figures take into account social housing or state-provided services such as education (there is less social housing in AmericaÊthough school education is free as in Britain). But the US poverty line is drawn at a higher level than in Britain, due to higher average incomes.

Another measure of poverty, ownership of consumer durables, throws up equally startling results. Among those formally categorised as impoverished in America, 36% own a dishwasher, 73% cable or satellite television, 75% a car or truck and 75% have air conditioning. A recent UK government analysis of Britain's 12m poorest people, or the "bottom quintile" - by no means all of whom live below the poverty line - showed that only 22% have a dishwasher and just 25% have cable television.

But an income survey of the poorest 20% in both countries show Britain's welfare provision kicking in. In Britain, this group had an income after tax and benefits of £8,890 over 2003-04 - against £6,815 in the US. But when divided into five income groups, the second-lowest in America earn 33% more than their British counterparts with average incomes of £17,424 against £13,100 in Britain.

This gulf becomes more marked up the salary scale. The middle fifth in US are 68% better-off than the middle fifth in the UK (£29,520 against £17,470) and the richest fifth of Americans take home twice the £35,000 of the UK counterparts. Much of the difference is accounted for by the lower cost of living in the United States.

All the figures have been adjusted to take account of the International Monetary Fund purchasing power parity measure. The income figures are based on average household earnings divided by population.

Initiatives in the UK have not stopped the weekly incomes of the poorest 10% falling, in real terms, two years in a row.

So much for "Great" Britain.

Britain could soon be Europe's sick man again


Post a Comment

<< Home