UK's Economic Growth Post-EEC Membership: An Analysis

Since joining the European Economic Community (EEC) in 1973, the UK has faced challenges in becoming the largest economy in Europe. The question often asked is, why despite entering the EEC at the same time as Germany, has the UK not been able to surpass Germany in terms of GDP? This article explores various factors that contribute to economic growth within the European Union, focusing on the role of population, productivity, and the evolution of EU benefits.

Population and Its Impact on GDP

One of the primary determinants of a country's GDP is its population. According to the World Bank's data, as of 1960, the UK GDP was on a broadly equal level with that of France. Germany, with 25 million more people than the UK, consistently maintained a higher GDP. In 2016, Germany's population was higher, by 25 million, and its GDP was 32% higher. This stark difference highlights the significant impact of population size on economic output.

While it is feasible to make up for a potential productivity gap over a longer period, the already high per capita GDPs of both the UK and Germany make it virtually impossible for the UK to significantly increase its productivity to surpass Germany. This is particularly challenging given that the differences in per capita GDP among European industrial countries are relatively small and attributed to various factors, including policy, infrastructure, and natural resources.

It is important to note that a higher GDP per capita does not necessarily translate to higher GDP in absolute terms, especially when considering the impact of the population. For instance, developing countries can sometimes see significant growth due to rapid productivity improvements, but the UK's situation is constrained by its existing high levels of productivity and GDP per capita.

The Role of EU Membership

Joining the EEC (now European Union) offered several advantages to the UK, including the reduction of consumer prices and wage increases. However, the main economic benefits of EU membership were more pronounced after the implementation of the Single Market in 1993, which facilitated trade in goods and services more effectively.

For these reasons, it is not surprising that the immediate benefits of EU membership in the 1970s were not as significant as they are today. The assumption that the UK could have grown to become the largest economy in Europe solely based on its EU membership, without considering the timeline of EU benefits, is not supported by historical data. Therefore, the initial impact of EU membership on the UK's economy was likely a one-off boost, rather than a long-term growth driver.

Why Germany Outpaced the UK?

One common argument is that Germany, with a larger population, has an inherent economic advantage. However, this argument overlooks several other factors that contribute to a country's economic growth, including economic policies, productivity levels, and the broader context of economic conditions in the EU. The UK and Germany have faced different economic conditions over the years, making it difficult to attribute economic success solely to population size.

It is also important to note that the advantages offered by the EU are shared among all members, meaning that no single country can benefit more than others just by being part of the EU. The EU's economic policies and benefits are designed to promote balanced growth among all member states, rather than allowing one country to become dominant.

Therefore, the question of why the UK has not been able to surpass Germany's economic growth is more complex than a simple comparison of population and EU membership. The UK's economic performance is influenced by a multitude of factors, including its productivity levels, economic policies, and the broader economic context within the EU.

Conclusion

While EU membership has provided various benefits to the UK, including reduced consumer prices, wage increases, and improved trade facilitation, it is not the sole factor in determining economic growth. The population size is a critical factor, but it is not the only determinant. The UK's economic performance is also influenced by its productivity levels and the broader economic conditions within the EU. The UK and Germany have faced different economic challenges and opportunities, which have contributed to Germany's higher GDP.