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Croydon’s economic growth is well below the European average, figures show

Croydon’s economic growth is well below the European average, figures show
Apr 10, 2018 Shaking Hands 0 comments
This post was first published by Croydon Advertiser on 09/04/2018.

Croydon’s economic growth is well below the European average, figures show

Experts say that the European average is moving up because of faster growth in Eastern European countries.

Croydon’s economic growth is well below the European average – despite being well above that average just 15 years ago.

In 2016, the per capita GDP stood at eight per cent below the European average in Croydon, latest figures from Eurostat show.

This is a drop by 29 percentage points compared to 2001, when the GDP per capita stood at 11 per cent above the European average.

Experts say that the European average is moving up because of faster growth in Eastern European countries.

At the same time, UK growth – which was hit harder than other European countries by the financial crisis – has slowed, with weak productivity growth.

Figures refer to the GDP at market prices, which is the sum of the gross values added of all resident producers at market prices, plus taxes, less subsidies on imports.

This is the fourth biggest decrease across Europe.

In 2001, our national per capita GDP at market prices was 16 per cent above the European average.

After 15 years, in 2016, the economy stood at just eight per cent above the European average.

Arno Hantzsche, senior economist at the National Institute of Economic and Social Research, said that the UK has become more average.

He said: “There are two phenomena going on that can explain why this is happening. From an EU point of view, countries in Eastern Europe are catching up quite a bit.

“As a consequence, even if the UK would stay exactly the same in terms of economic structure, what people earn or price levels, since other countries are catching up means that the European average is moving up.

“A lot of Eastern countries, after the Cold War, have changed their economic structures.

“They joined the European Union, they became part of the single market, their goods can move freely, workers can move to the rest of Europe and send the money back, increasing the GDP per capita in their countries.

“All these factors contribute to the catching up process.

“From the UK point of view, as the financial crisis hit the financial sector of the UK – which has been very reliable – the country was affected by the crisis more than other countries with a stronger manufacturing economy.

“Before the financial crisis, the economy has possibly been growing too much while now is moving closer to a more sustainable level of growth determined by weak productivity growth.”

When it comes to everyday life, the economist explained that wage growth is likely to be lower than in other countries in real terms if productivity growth were to remain weaker.

People are not necessarily becoming poorer but they will see a slower increase in their personal incomes compared to the rest of Europe.

According to Mr Hantzsche, “Brexit is one of those factors which already seems to have a negative impact on investments”.

He added: “If this trend will continue, we risk seeing weaker productivity growth.”

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