NEW YORK – It is truly odd to read Paul Krugman rail, time and again, against the British government. His latest screed begins with the claim that “Britain’s economic performance since the financial crisis struck has been startlingly bad.” He excoriates Prime Minister David Cameron’s government for its “poor economic record,” and wonders how he and his cabinet can possibly pose “as the guardians of prosperity.”
Hmm. In recent months, Krugman has repeatedly praised the US economic recovery under President Barack Obama, while attacking the United Kingdom’s record. But when we compare the two economies side by side, their trajectories are broadly similar, with the UK outperforming the United States on certain indicators.
Consider, first, the unemployment rate. In the fourth quarter of 2007, the UK’s rate was 5.2%. When Cameron’s government took office in May 2010, it was 7.9%. In the most recent reporting period (November 2014-January 2015), it was 5.7%. In the US, the unemployment rate in the fourth quarter of 2007 was 4.8%, 9.8% in March-May 2010, and 5.7% in November 2014-January 2015. In both countries, the unemployment rate is therefore slightly above the pre-crisis (end-2007) level, with no significant net difference over the business cycle from the end of 2007 until now.
Next, let’s look at the employment rate, which in the UK stood at 72.9% of the population aged 16-64 at the end of 2007. It fell to 70.4% by the time the Cameron government came to power, but since then has risen strongly, to 73.3% in November 2014-January 2015, an all-time high. In the US, by contrast, the employment rate was 62.8% at the end of 2007, 58.6% in March-May 2010, and then only slightly higher, at 59.2%, during November 2014-January 2015 – still below the pre-crisis level. This suggests that there are more discouraged workers in the US than in the UK.