Britain Lives It Up

By Mark Scott

Chalk one up for Queen and country. For the first time since 1885, Britain’s standard of living, measured by per capita gross domestic product, is poised to overtake that of the U.S. British GDP per head will hit $46,088 this year, compared with $45,598 in America, predicts Adrian Cooper, managing director of financial consultants Oxford Economics. Thank the pound’s strength against the dollar for about 75% of Britain’s advance, Cooper says.

But economic reforms, including looser rules on hiring and firing workers and the creation of an independent central bank, were also helping to close the gap in the past decade, well before the greenback began losing serious ground to sterling. And, Cooper adds, lower corporate taxes are giving Britain’s financial and business sectors a boost. The U.S. still tops Britain when it comes to purchasing power, another measure of prosperity.