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Italian GDP per capita surpasses that of the UK: an unexpected turnaround

Italian GDP per capita surpasses that of the UK: an unexpected turnaround

For the first time since 2001, the average level of economic well-being in Italy has surpassed that of the United Kingdom, marking a significant moment for both countries. This represents a setback for London, where the government led by Keir Starmer and Chancellor Rachel Reeves is seeking to boost growth and competitiveness. According to World Bank estimates, gross domestic product per capita—adjusted for the cost of living—reached $60,847 in Italy, exceeding the British dollar's $60,620. Although the UK's overall GDP remains higher, the average individual income is now lower than Italy's. The difference is accentuated by demographic trends: the British population continues to grow rapidly, redistributing the wealth it produces among a larger number of residents. In Italy, however, the population is declining, allowing for a more significant increase in average income despite similar economic growth.

The British context remains complex: unemployment has risen to 4.7%, inflation is poised to hit 4%—double the Bank of England's target—and public spending on benefits continues to rise. Adding to this is the difficulty of implementing structural reforms: the Labour government's attempts to reduce welfare measures have encountered internal resistance, forcing several policy backtracking. The National Institute of Economic and Social Research has also warned that the stagnation of the last decade is jeopardizing the UK's position among the most developed countries, with the poorest families now worse off than those in several Eastern European countries.

On the other hand, Italy has seen unexpected progress recognized. As reported in the Daily Telegraph—which features two analyses by Tim Wallace, deputy economics editor, and Daniel Johnson, political columnist—this effect is primarily due to the reforms enacted by the Meloni government, from the reduction of certain pension benefits to the simplification of the judicial system, which have received positive reviews from several international analysts. Building incentives, along with European funds from the Next Generation EU program, have significantly boosted the economy, helping to reshape the image of a country long perceived as economically fragile. Political stability—rare in Italy's recent history—is also now seen as an attractive factor compared to other large European countries experiencing internal tensions.

Despite progress, Italy continues to face structural challenges. Public debt remains high—approximately 130% of GDP, compared to 100% in the United Kingdom—and the end of the so-called super bonus has left a heavy fiscal legacy. Furthermore, real wages have not yet recovered to pre-pandemic levels, unlike in Great Britain. On the social front, the United Kingdom is defending some support measures, such as increasing the minimum wage, caps on public transportation, and school welfare programs, aimed at protecting families' purchasing power.

Economists see this overtaking as a sign of a reversal of the trend: Italy is no longer simply the "sick man of Europe," while the United Kingdom faces the risk of a relative decline. According to Andrew Kenningham of Capital Economics, this is an event comparable to the 1980s, when the Italian economy briefly surpassed the British one. The overall picture suggests that, while both remain among the world's leading economies, Italy and the United Kingdom are now on diverging trajectories: Rome is recovering, while London is grappling with a slowdown that is challenging its historic primacy in terms of living standards.

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