Investment - Articles - Platinum Jubilee and how does the UK economy compare to 1952

 Jake Finney, economist at PwC, says: “The economy is around five times bigger now than when Queen Elizabeth came to the throne in 1952. Over the same period, the population increased by around a third, which implies average incomes are almost four times higher in real terms. This is equivalent to an increase in GDP per capita from around £8.5k in 1952 to £32.6k now.

 “Government spending as a proportion of the economy has edged up slightly, with the OBR expecting it to reach around 43% this year, up from 41% in 1952, despite the fact that the overall tax burden is expected to fall from 40% of GDP to around 38%. How the government spends this money has also changed greatly, with the share of government spending on defence down from around 23% to only 5%, while health spending has gone in the opposite direction, increasing from around 7% to 20%. Spending on defence is likely to increase in the coming years - but it is unlikely to hit the heights seen during the 1940s and 1950s.

 “However, some things don’t change. CPI inflation was at 11.2% during the Queen’s accession in February 1952, 2.2 percentage points higher than the 9.0% recorded in April 2022. In the 1950s it was the Korean war that sent commodity prices spiralling, while today it is war in Ukraine that has had the same effect. We expect that it will take around three years in total for inflation to return to target, which is a similar length to the inflationary episode of the early 1950s when the Queen took the throne.”