Living standards set to overtake US

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The UK's gross domestic product (GDP) is expected to rise to £23,500 per person during 2008, £250 more than the £23,250 GDP per head predicted for Americans, according to Oxford Economics.

Britons are also expected to enjoy higher living standards than both the Germans and the French, with GDP per head in the UK around 8% higher than in both of these countries, where it is expected to be £21,665 and £21,700 respectively.

But despite the UK overtaking the US in terms of GDP per head, it does not mean the average Briton will suddenly feel wealthier than their American counterpart. Americans are still likely to feel richer because goods and services are cheaper in the US, meaning they have stronger purchasing power.

The UK has enjoyed strong economic growth during the past 15 years and this has helped it overtake the US in terms of living standards.

Adrian Cooper, managing director of Oxford Economics, said: "The last 15 years have seen a dramatic change in the UK's economic performance and its position in the world economy.

"No longer are we the 'sick man of Europe'. Not only have we left Germany and France in our wake, our calculations reveal that UK living standards are now outstripping those of the US."

The group said the rise in living standards was part of a long-term trend, with the UK seeing substantial relative improvements since the early 1990s.

It said in 1993, following the last major recession and the UK's ejection from the ERM, GDP per head in the UK was 34% lower than in the US, 33% lower than in Germany and 26% lower than in France.

The increase in the UK's GDP per head relative to these countries in a large part reflects the long period of sustained economic growth that the UK has enjoyed since 1993.