Assessment and recommendations

Living up to the challenges posed by globalisation is the over-arching theme of this Economic Survey. Compared with its large European neighbours, the United Kingdom has been more proactive in adapting to international economic forces. This is reflected in support for free trade, openness to foreign direct investment, a willingness to open its labour markets to the citizens from the new EU member countries that joined in May 2004, the adoption of regulatory policies that promote efficiency and a macroeconomic policy framework that has enhanced economic resilience. This willingness to embrace the opportunities offered by globalisation is generally backed by widespread support among key groups, including politicians, trade union leaders and employers. This has been rewarded with a stronger economic performance. The level of gross domestic product (GDP) per capita is now the third highest in the G7 (after the United States and Canada). Ten years earlier it was the lowest in this group. The United Kingdom’s GDP per capita ranking among all OECD countries has also improved. GDP growth has been close to its trend rate of around 2¾ per cent for a number of years, suggesting that the amplitude of the economic cycle is smaller now than in previous decades.