In the 1800s, the United Kingdom was clearly the richest country in the world, with steady and strong economic growth, a focus on science and engineering, and all the benefits of trade across oceans. But today, the country seems to have lost its momentum. The country’s standard of living lags far behind that of other developed economies.
Contrary to popular perception, Britain’s GDP per capita (the income generated by the average person) lagged behind that of the vast majority of the 50 United States plus Washington DC last year, according to US government forecasts for the third quarter of 2025 and recent data from the International Monetary Fund. Projections are necessary because final annual GDP figures were not published at the time of writing this report.
When these states (plus Washington DC) compared their GDP per capita, the UK would have ranked 50th, behind Alabama, which is projected to have a nominal GDP per capita of $60,265 in 2025. Britain was slightly worse off, at $60,010, according to the latest US government data and the International Monetary Fund. Topping the list was Washington DC with $113,369. Analysts note that the figures do not include the cost of living; However, even taking this into account, the UK still lags significantly behind the US national average.
“If you leave aside the British capital, London, their GDP per capita is much lower,” Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, told FOX Business. London has a huge financial center, which distorts certain data. One of the major problems has been the lack of productivity growth, which measures the increase in output per average employee, Chandler says “productivity increases in the United States have been stronger.”
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A sign showing the London Stock Exchange. (Toby Melville/Reuters / Reuters)
On average, GDP per capita in the United States is expected to reach $89,599 in 2025, considerably higher than in Britain. The UK also lags behind Ireland, Switzerland, Singapore, Norway and Germany, to name just a few countries, according to International Monetary Fund forecasts. “This is what happens when you destroy innovation and taxes are too high and there are too many regulations,” Robert E. Wright, a historian of economic policy at the University of Austin, Texas, told FOX Business.
Wright notes that there is also a British cultural tendency towards risk aversion for many reasons. Even if a project or new business is successful in the UK, the business will be heavily imposed then hindered by newly created regulations. “Not only do these barriers not help them, but they are also shooting themselves in the foot,” he says. “And they’re not at the technological frontier.” American businessmen tend to accept risk.
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British Prime Minister Keir Starmer. (Getty Images/Getty Images)
Opinion surveys suggest the immediate future looks bleak, suggesting the UK economy will not suddenly return to normal, according to a research report from analyst firm Oxford Economics. “The UK lacks an engine of sustainable growth,” the briefing paper says. Indeed, what keeps the economy growing, even at a very slow pace, is UK government spendingrather than the organic growth and innovation of private sector companies.
Government spending led to job creation, which helped mitigate private sector job losses, according to the Oxford Economics report. “But the public sector push will probably start to fade,” he says. “Given weak private sector demand, we expect the unemployment rate to continue to rise.”
The Oxford report also shows that since the second half of 2023, government jobs have been stubbornly better paid, on average, than those in the private sector. This risks harming the encouragement creative entrepreneurs to innovate, experts say.
A Union flag flies near the Elizabeth Tower, better known as ‘Big Ben’, and the Houses of Parliament in central London on March 6, 2017. (Ben Stansall/AFP Getty Images/Getty Images)
Oxford Economics forecasts slight growth of 1% for 2026. But this was forecast before the US-Israeli war against Iranwhich could lead to probably weaker growth for the British analyst, the analyst warned.
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Robert Jenrick, shadow chancellor of Britain’s Reform Party, has criticized the Labor government’s handling of the economy. “We are losing our steel, our car manufacturing, our glass, our ceramics, our chemical industries,” he told Britain’s Daily Express. “Millions of good jobs depend on these industries, and they simply will not survive if we continue to have energy prices which are five or six times higher than in the United States. »