England dominates European football. It looks as if it will take home the trophy for economic success, too, says Matthew Lynn.
Dramatic last-minute comebacks, nail-biting penalty shoot-outs, spirit, determination and the occasional flash of sublime skill. It’s a been a great month for English football. Both the Champions and Europa League finals will be played between English teams, the first time any single country has so dominated the continent’s most popular sporting spectacle. Three of the four finalists are from London. European football is turning into an extension of English sporting rivalries.
Money isn’t everything, but it helps
Across Europe, the leading clubs have feared for some time that English clubs would come to dominate. Why? Simply because they have so much more money, and because that wealth is relatively evenly spread around the league. Six of the ten richest clubs in the world are English, and nine of the top 20, with even a relatively middle-ranking team such as West Ham close to AC Milan in annual revenues. Real Madrid might remain the richest team overall, but it is the Premier League that has the greatest overall wealth. Money doesn’t automatically buy success – just ask increasingly long-suffering Manchester United supporters – but it certainly raises the chances of it. And over the medium-term, the richest clubs are going to have the best players and the best results.
That is just an early signal of a bigger trend that will become increasingly apparent as the 2020s unfold: the UK is becoming the dominant economic power in Europe, too. Just take a look at the figures. The British population is rising steadily, while other countries are about to go into steep demographic decline. Eurostat predicts the UK population will hit 77 million by 2050, up from 67 million now. By the same year, Germany will have shrunk to 74 million from its current 80 million. France will be roughly the same. No other country will be even close to matching our growth.
How will that translate into total GDP? It is hard to say, but a few points are clear. The UK is growing faster than both Germany and France, and has been for some time now. Right now, Germany still has a slightly higher GDP per capita than the UK – $44,000 against $39,000 – but that may well close. France’s GDP per capita is already slightly lower than the UK’s. And with ageing populations, both will have far fewer working people. On current trends, the UK should become the largest economy in Europe sometime in the 2030s.
There are other signs of growing British dominance. London is by far the largest city in Europe, with nine million people. Berlin is the next closest with only three million. London is much the richest, too. Inner London has a GDP per capita of six times the EU average; Luxembourg is in second place on just 2.5 times the average. The largest national stock exchange in Europe is London’s, with more than 3,000 listed companies with a combined value of £3.7trn. Of the top ten universities in the world, three are British (Oxford, Cambridge and Imperial). The rest are all in the US – there are none in the rest of Europe. London has produced 17 tech unicorns, compared with seven for its closest rival, Berlin, while a third of all tech start-ups worth more than a billion dollars are UK-based.
It’s not just football that’s coming home
We have become used to a European economy dominated by Germany, with the UK as a middling player ranking roughly alongside France and Italy. That is starting to change. Driven by demographics, as well as an incredibly high employment ratio, the UK is on course to become Europe’s dominant economy, and London its dominant city. British companies, ideas, science, technology, entrepreneurs, think-tanks and sports teams will become increasingly influential simply because they have a much larger domestic market. Meanwhile talent will increasingly migrate toward UK cities, universities and financial centres simply because that is where the money and the prestige are. Football may be coming home. Global economic dominance may well be too, Brexit or no Brexit.