Why is the UK economy lagging behind the US, Germany and others?

The UK system is struggling - and radical are feeling it successful their pockets, arsenic wages neglect to support up with rising prices.

The International Monetary Fund (IMF) predicts the UK system volition shrink this twelvemonth portion each different large system volition grow.

The Bank of England besides forecasts a recession successful the UK successful 2023 - albeit 1 that is shorter and little terrible than antecedently forecast.

Perhaps it's not astonishing the outlook is bleak fixed the pandemic, the warfare successful Ukraine, and soaring costs of some vigor and food.

But wherefore is the UK seemingly faring worse than different affluent countries specified arsenic the US, Germany and France?

Forecasts are ne'er perfect. There are truthful galore factors that impact economical maturation - from geopolitics to the upwind - that, inevitably, predictions often miss the mark. But they tin constituent successful the close direction.

And the existing grounds shows different countries person taken little of a deed from the immense challenges of caller years than the UK has.

Figures from the Organisation of Economic Cooperation and Development (OECD), which looks astatine however affluent countries are performing, amusement the UK system fell further than others successful the archetypal months of the pandemic.

The UK's gait of betterment was accelerated erstwhile the system reopened - but not accelerated capable to marque up the mislaid ground.

But the quality betwixt the UK and others whitethorn not beryllium rather arsenic large arsenic it appears.

That's due to the fact that astir countries measurement the output of their nationalist services, specified arsenic wellness and education, based connected the costs - a nurse's wage, for example. In the UK they are accounted for differently, by valuing the services delivered - specified arsenic operations successful hospital.

As a result, the UK's figures amended bespeak the interaction of closed schools and cancelled operations during Covid, arsenic good arsenic disruption owed to strikes.

The bigger picture, however, remains: the Bank of England and the IMF some expect the UK system to shrink this year, portion different G7 countries are expected to grow.

Some observers, including pro-Brexit economist Julian Jessop, judge the IMF was overly gloomy astir the UK's prospects and that the differences nether treatment - a percent constituent present oregon determination - are small.

Nevertheless, helium says, determination is inactive decidedly "something to explain" astir the UK's flagging economical performance.

Estimates astir the outgo of Brexit alteration - according to a report by Bloomberg it is costing the UK system astir £100bn a year, and the system is 4% smaller than it mightiness person been if the UK had stayed successful the EU.

"The EU is simply a precise affluent portion of the world," says Carl Emmerson, lawman manager of the Institute for Fiscal Studies, an autarkic deliberation tank. "And we've chosen, for amended oregon worse, to marque commercialized with that grouping of countries a batch much difficult, truthful it's intelligibly going to beryllium thing that makes it harder for the UK system to grow."

Business concern has stagnated since the referendum ballot successful 2016 too, helium says - different "drag connected growth". A Bank of England policymaker has said that Brexit deed UK concern to the tune of £29bn.

EU workers utilized to travel freely to enactment successful the UK but tin nary longer bash so, making it hard for the hospitality, agriculture, and attraction sectors to find capable staff.

Julian Jessop is simply a chap astatine the escaped marketplace deliberation vessel the Institute of Economic Affairs and describes himself arsenic a "Brexit optimist". He believes determination are large imaginable gains from leaving the EU, but agrees determination person been short-term economical costs.

"We're inactive successful a benignant of modulation phase, wherever the negatives are dominating," helium says.

But helium says those negatives are "smaller than radical person been arguing" and "more apt to beryllium temporary, due to the fact that a batch of them person to bash with uncertainty and the process of adjustment".

Russia's penetration of Ukraine sent planetary vigor prices soaring - but the interaction varies betwixt countries.

The US has its ain home sources of fossil fuels and immoderate European countries person much alternate sources of energy, Mr Emmerson says. France, for example, has a ample atomic network, and Norway has important hydropower.

"Britain is beauteous exposed," helium says.

Moreover, the mode the UK prices energy is based connected the outgo of gas, the astir costly signifier of energy generation. That has pushed up bills crossed the system and made ostentation worse, Mr Jessop says.

Most economies saw their workforce shrink during the pandemic.

But again, the UK is an outlier, with numbers failing to bounce backmost aft the crisis.

Economists are inactive trying to enactment retired why. It seems it is not conscionable down to having less EU workers.

Young radical person opted to survey alternatively than work, older radical person retired early, and much radical are receiving semipermanent sickness benefits.

There are signs the workforce is starting to turn again, which could assistance boost maturation and taxation revenues aboriginal this year.

There are besides much cardinal reasons down the UK's weaker performance, suggests Cambridge University economist Diane Coyle.

While the system has slowed since the fiscal situation successful 2008, the roots of the problems spell backmost overmuch further, she argues, with concern successful diminution since the 1990s.

That near the system lacking the resilience to header with the triple shocks of Covid, Brexit and the warfare successful Ukraine.

"That's down to the semipermanent weaknesses, semipermanent nether investment, successful the backstage and the nationalist sector, [and] degradation of nationalist services and infrastructure, which are conscionable indispensable if the system is going to grow," she says.

For its part, the authorities says the UK system is resilient.

Responding to figures showing that the UK narrowly avoided a recession successful 2022, Chancellor Jeremy Hunt said the numbers showed "underlying resilience" - but added the state was "not retired of the woods".