The UK collects data around economic growth and migration statistics which are released by the Office of National Statistics (ONS). This measures those entering and leaving the country and gross domestic product (GDP) which acts as a measure of economic health, but it can disguise underlying issues affecting individual prosperity. This is particularly so in the context of significant population changes due to migration and varying inflation rates across sectors.
Less attention is paid to the more accurate measure of per capita economic growth that accounts for population changes and better reflects individuals’ prosperity and what policy changes we might expect to see in response to figures that are moving against where policymakers have said those statistics should be.
This note explains the concept of a personal recession, where per capita economic growth has declined for two quarters, and shows how this concept is a better explanation for the economic circumstances of the average citizen when productivity, migration and inflation can all impact GDP growth individually.
READ THE BRIEFING NOTE
Key findings
- The UK is currently in a personal recession with GDP per capita falling by 0.3 per cent in Q3 2024 and 0.1 per cent in Q4 2024
- In the last decade the UK has experienced three personal recessions, with the first beginning Q2 2020 and ending Q3 2020, and the second beginning in Q2 2023 and ending Q1 2024.
- Since Q4 2022, GDP per capita increased in two quarters and fell in six quarters.
- If pay for members of Parliament (MPs) since 2010 was linked to average GDP per capita growth over five years (excluding years of negative growth), it would be £81,945 instead of £93,904 which it is set to rise to in April 2025.