Comment on the relative performance of the UK, France, Germany and the USA since 1997.

Over the last 10 years the economic performance of the European countries and the US has varied a lot, due to the external shocks (terrorist attacks) and economic policies. While France and Germany do not have control over their monetary policy, the UK and the US do. Therefore the rest of this essay will analyse the difference in the economic performance of those countries over the last 10 year and provide some explanations for the difference that occurred. Graph 1. Relative GDP Performance

Source: Euro State, 2007 From Graph 1, it can be seen that the UK has the most stable growth over the last 10 years, while Germany had the highest variation in its GDP performance. All of the countries saw a sharp decline in their GDP growth after the 9th September 2001, with the USA worst affected. However, such a sharp decline has also allowed the US to reshape its GDP the most by 2004. In comparison, Germany’s sharp decline in 2001 has led to a further GDP decline in 2002 and in 2003 the country saw negative economic growth. Over the last 10 years the US saw the highest overall growth in its GDP (28.9%), closely followed by the UK (28.5%) and France (22.8%). Germany struggled with only a 15.5% increase.

Graph 2. Relative GDP performance of Germany and France against EU15 Source: Euro State, 2007 Graph 2 shows the performance of France and Germany relative to EU15. It can be seen, that while France followed the EU15 performance closely until 2006, Germany’s performance lagged from 1998 and the country struggle to catch up

With the EU15 performance until 2006. After 2006, Germany’s performance has increased dramatically; allowing it to catch up with the EU15 and it is predicted that it will follow this trend in the future. France’s