Europe’s relatively narrow and fragmented financial industry is like a weak financial heart that struggles to pump sufficient capital and liquidity to support healthy European companies and economic growth. The gap between US and European financial sectors has widened steadily since the 2008-2009 crisis, after which banking regulations were notably tightened. Indeed, the total market capitalisation of European banks (including the UK and Switzerland) fell from $2.7tn in 2007 to $1.4tn by 2021, according to a recent study by the Official Monetary and Financial Institutions Forum, a think-tank. Europe’s decline is even more striking when compared with the increase in US bank market capitalisation: from $1.6tn to $2.6tn.
- Date Posted:
- February 1, 2024
The level of GDP per working age adult varies across these countries. The somewhat puzzling lack of convergence remains. Note everyone’s ratio of working age to total population peaked in 2010 and is headed downward. Japan just leads the trend, having peaked in 1990. The “right” number depends on what question you want to ask, what version of “how well is an economy doing?” If you want to know how many aircraft carriers a country can build, or if the government can repay its debts, you want GDP. If you want to measure labor productivity, the fundamental efficiency of its businesses, you want GDP per hour. If you want to measure overall average standard of living, GDP per person is a good beginning. GDP per working-age person is a measure of productivity that includes all the impediments from high taxes to regulations that discourage people working. It leaves out fertility, a country’s crucial ability to produce workers to pay for everyone else. That is an important issue, but it is at least a very long run issue, and not one on which we have well understood policies.