Social Europe

  • EU Forward Project
  • YouTube
  • Podcast
  • Books
  • Newsletter
  • Membership

Did EU Membership Accelerate UK Economic Growth?

Graham Gudgin and Ken Coutts 29th September 2017

Graham Gudgin

Graham Gudgin

The Brexit debate has been distorted by several myths. One of the most persistently and widely quoted, including during the 2016 referendum campaign and subsequently as in here, is that the UK’s economic performance improved after joining the EU in 1973. Performance is usually measured as GDP per head, and on this measure the UK economy did not improve after joining the EU. Indeed, it clearly grew more slowly than it had in pre-accession decades.

Using Conference Board data at purchasing power parity (PPP), the slowdown was from 2.4% per annum from 1950-73 to 2.0% per annum for 1973-2007.This slowdown is of course greater if the period is extended to include the post-banking-crisis years. It is also somewhat greater if the UK National Accounts data is used, and is also similar if we take account of the transition period to full UK alignment with the EU tariff regime up to 1978.

Ken Coutts

Ken Coutts

The claim that membership of the EU was beneficial in terms of UK GDP per head comes instead from a comparison with the original six EEC members (the EU6). Over the period 1950-73, per capita GDP in the EU6 grew at an unprecedentedly rapid average rate of 4.6% per annum measured using PPP data. This was almost twice as fast as the UK’s sedate 2.4% per annum. The UK ‘s growth rate was reasonably rapid by its own historical standards and was sufficient to maintain full employment through most of the period. Perhaps ironically, the period 1950-73 in the UK is often termed the ‘golden age’ in the UK, even by economists who argue that joining the EU was beneficial for UK economic growth – and would take the view that the UK could grow significantly more rapidly by joining the fast-growing EEC.

Another irony was that growth in the EU6 economies slowed down very soon after UK accession to the EEC. From 1979 to 2007 growth in per capita GDP in the EU6 was only 1.6% per annum, well under half the pre-1973 rate. Per capita GDP in 2015 was at the same level as in 2007 although growth has picked up since then. Protagonists of UK economic benefit from EU membership argue that its growth improved relative to the EU6. Prior to accession in 1973 UK economic growth at 2.4% per annum had been 2.2 percentage points a year slower than the EU6 (see above). After accession, and up to the banking crisis starting in 2007, UK growth was 0.3 percentage points faster than that of the EU6. It is this improvement of 2.5 percentage points that is taken as the prime evidence of a gain from membership. Before joining the EU, the UK was a laggard relative to the EU6. After accession, the UK actually performed a little better than these economies for most of the period.

We should notice, however, that the UK’s relative improvement was wholly due to the slowdown in the EU6. To repeat, there was no tangible improvement in economic growth in the UK itself. To believe that the growth of the UK economy stemmed from EU membership, we must believe that it would have deteriorated outside the EU. If the slowdown in EU6 growth was due to general world factors, including the six-fold increase in the real oil price between 1973 and 1980, this may be plausible. Such factors should however have also affected other major economies including the USA, Canada and Australia, but here the post-1973 slowdown was minor and much less than in the EU6.

The slowdown in the EU6 has a much more obvious explanation. Rapid growth in these countries was initially due to post-war reconstruction and then to post-war economic reforms. In 1950 per capita GDP in the EU6 was only half that of the USA. By 1979 it was close to 90% of the US level. This meant that catch-up with the technological frontier represented by the USA was largely complete by the end of the 1970s. After that, growth could not be faster than the USA unless innovation, skills and efficiency rose above US levels, which they did not. Growth thus settled down at close to the US rate. Importantly, we would not expect the same slowdown for the UK which neither mirrored the EU6’s post-war catch-up with the USA, nor has approached close to the US level of per capita GDP.



Don't miss out on cutting-edge thinking.


Join tens of thousands of informed readers and stay ahead with our insightful content. It's free.



A better counterfactual for the UK economy is the USA. In this case, UK GDP per head has remained close to 72% of the US level throughout the post-war period. There is no sign that joining the EU improved UK economic growth relative to the USA. The only small improvement came after 2000 and was due to a minor slow-down in US growth.

gudgingcoutts graph01

We can conclude that there is no evidence that joining the EU improved the UK’s rate of economic growth. Growth in the UK, as elsewhere, is constrained by technology, skills and investment. None of the latter features has been better than the USA and hence the USA experience puts a ceiling on potential long-term growth in the UK, as it does in the EU6. The irony is that the UK joined the EEC just as the EU6 catch-up ended. The UK thus joined on a false prospectus that accession would accelerate growth. Also ironic is the fact that the previously slow-growing Commonwealth markets have actually expanded faster than the EU over the long period since 1973. If the performance of the EU had been better, and the Commonwealth worse, the UK may have felt less temptation to leave, but this was not the case. Those advocating Remain must take an asymmetric view that although joining the EU did not improve UK growth, leaving will damage growth.

Graham Gudgin and Ken Coutts

Graham Gudgin is Honorary Research Associate at the Centre For Business Research (CBR) in the Judge Business School at the University of Cambridge and Chief Economic Advisor at Policy Exchange in London. He is also visiting Professor at the University of Ulster and Chairman of the Advisory Board of the Ulster University Economic Policy Centre. Ken Coutts is Honorary Research Associate at the Centre For Business Research (CBR) in the Judge Business School, Emeritus Assistant Director of Studies in the Faculty of Economics, and Life Fellow in Economics, Selwyn College, at the University of Cambridge.

Harvard University Press Advertisement

Social Europe Ad - Promoting European social policies

We need your help.

Support Social Europe for less than €5 per month and help keep our content freely accessible to everyone. Your support empowers independent publishing and drives the conversations that matter. Thank you very much!

Social Europe Membership

Click here to become a member

Most Recent Articles

u42198346ae 124dc10ce3a0 0 When Ideology Trumps Economic InterestsDani Rodrik
u4219834676e9f0d82cb8a5 2 The Competitiveness Trap: Why Only Shared Prosperity Delivers Economic Strength—and Resilience Against the Far RightMarija Bartl
u4219834676 bcba 6b2b3e733ce2 1 The End of an Era: What’s Next After Globalisation?Apostolos Thomadakis
u4219834674a bf1a 0f45ab446295 0 Germany’s Subcontracting Ban in the Meat IndustryŞerife Erol, Anneliese Kärcher, Thorsten Schulten and Manfred Walser

Most Popular Articles

u4219834647f 0894ae7ca865 3 Europe’s Businesses Face a Quiet Takeover as US Investors CapitaliseTej Gonza and Timothée Duverger
u4219834674930082ba55 0 Portugal’s Political Earthquake: Centrist Grip Crumbles, Right AscendsEmanuel Ferreira
u421983467e58be8 81f2 4326 80f2 d452cfe9031e 1 “The Universities Are the Enemy”: Why Europe Must Act NowBartosz Rydliński
u42198346761805ea24 2 Trump’s ‘Golden Era’ Fades as European Allies Face Harsh New RealityFerenc Németh and Peter Kreko

Foundation for European Progressive Studies Advertisement

Spring Issues

The Summer issue of The Progressive Post is out!


It is time to take action and to forge a path towards a Socialist renewal.


European Socialists struggle to balance their responsibilities with the need to take bold positions and actions in the face of many major crises, while far-right political parties are increasingly gaining ground. Against this background, we offer European progressive forces food for thought on projecting themselves into the future.


Among this issue’s highlights, we discuss the transformative power of European Social Democracy, examine the far right’s efforts to redesign education systems to serve its own political agenda and highlight the growing threat of anti-gender movements to LGBTIQ+ rights – among other pressing topics.

READ THE MAGAZINE

Hans Böckler Stiftung Advertisement

WSI Report

WSI Minimum Wage Report 2025

The trend towards significant nominal minimum wage increases is continuing this year. In view of falling inflation rates, this translates into a sizeable increase in purchasing power for minimum wage earners in most European countries. The background to this is the implementation of the European Minimum Wage Directive, which has led to a reorientation of minimum wage policy in many countries and is thus boosting the dynamics of minimum wages. Most EU countries are now following the reference values for adequate minimum wages enshrined in the directive, which are 60% of the median wage or 50 % of the average wage. However, for Germany, a structural increase is still necessary to make progress towards an adequate minimum wage.

DOWNLOAD HERE

S&D Group in the European Parliament advertisement

Cohesion Policy

S&D Position Paper on Cohesion Policy post-2027: a resilient future for European territorial equity

Cohesion Policy aims to promote harmonious development and reduce economic, social and territorial disparities between the regions of the Union, and the backwardness of the least favoured regions with a particular focus on rural areas, areas affected by industrial transition and regions suffering from severe and permanent natural or demographic handicaps, such as outermost regions, regions with very low population density, islands, cross-border and mountain regions.

READ THE FULL POSITION PAPER HERE

ETUI advertisement

HESA Magazine Cover

With a comprehensive set of relevant indicators, presented in 85 graphs and tables, the 2025 Benchmarking Working Europe report examines how EU policies can reconcile economic, social and environmental goals to ensure long-term competitiveness. Considered a key reference, this publication is an invaluable resource for supporting European social dialogue.

DOWNLOAD HERE

Eurofound advertisement

Ageing workforce
The evolution of working conditions in Europe

This episode of Eurofound Talks examines the evolving landscape of European working conditions, situated at the nexus of profound technological transformation.

Mary McCaughey speaks with Barbara Gerstenberger, Eurofound's Head of Unit for Working Life, who leverages insights from the 35-year history of the European Working Conditions Survey (EWCS).

Listen to the episode for free. Also make sure to subscribe to Eurofound Talks so you don’t miss an episode!

LISTEN NOW

Social Europe

Our Mission

Team

Article Submission

Advertisements

Membership

Social Europe Archives

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Miscellaneous

RSS Feed

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

BlueskyXWhatsApp