Brexit should have helped us to understand our economic status – instead, divisive politics inflated it

One of the most tired (to use a euphemism) of all the factoids that get dropped casually into public debates is that the UK is the fifth largest economy in the world.

This is usually mentioned by hard Brexiteers who want to make Britain sound big and important.

A variation is that the UK is the fifth richest economy in the world, usually from folks on the left who want more public spending.

Both are, well, problematic. They are at best outdated and based on money national incomes.

This can gyrate wildly with the exchange rate, but with nothing really changing on the ground.

The real data is revealed by abstracting that away and looking at things in real terms, what economists call purchasing power parity, or PPP.

On that basis the sound bite ought to be: the UK is the world’s ninth largest economy, and, post-Brexit, will probably go to 10th place. Not so impressive sounding.

Yes we’re still an important trade partner – but only around 10 per cent of EU exports come to us, while half of ours go to them.

For context, the UK generates about $3trillion a year: against $23trillion in China, $21trillion in the EU, $19trillion in the US, $5trillion in Japan and even $3.3trillion in both Brazil and Indonesia.

The GDP ratio between the EU and UK is about 7:1, that is the same ratio the UK is to Peru – hardly a position to make demands.

As for fifth “richest”, in GDP per head terms, the UK ranks about 26th, behind the likes of Taiwan, Denmark and Australia, though just ahead of Japan, South Korea and Malta. Qatar by the way usually ranks number one.

One of things that Brexit should have brought us is a more acute awareness of Britain’s real relative economic status and power. Looks like it didn’t: anything but, in fact.

Yours

Sean O’Grady

Associate editor