28th May 2015
Britain’s economy is now 100 times bigger than it was some 250 years ago, when Taylors & Lloyds in Birmingham, which would go on to become Lloyds Bank, was founded.
According to numbers from the lender, during that two and a half centuries, gross domestic product (GDP) has increased by 10,162% at an average annual rate of 1.9%
In addition average wages have risen by 1,684%, from £26.93 per week to £480.42 in today’s prices. The country’s population has also increased dramatically: from 9.2m in 1765 to 64.5m today.
For its part sterling has fallen by nearly two-thirds in value against the US dollar over the period, with the pound decreasing from $4.56 to $1.65.
The Bank of England Bank Rate is also much lower today, at 0.5% compared with 4.95% in 1765. Inflation, however, is also lower today at 2.4% – average annual RPI in 2014 – compared with 5.4% in 1765
Looking at the nation’s transformation, Owen Woodley, managing director of Lloyds Community Bank, said: “The UK economy has undergone a dramatic transformation over the past 250 years since Lloyds Bank’s creation. It has grown at an unprecedented rate and there have been huge improvements in standards of living for the UK population.”
The statistics highlighted that the Bank of England Bank Rate has ranged from an annual average high of 17.0% in 1979 to the current low of 0.5% since 2009. The Bank Rate has averaged 7.55% over the past 50 years; its highest average for any 50 year period since 1765. This was more than double the average of 3.75% during preceding 50 years (1915-1965).
Wages increased 1,393 fold (139,171%), at an average annual rate of 2.9%. The average weekly wage has risen from the equivalent of £0.34 in 1765 to £480.42 in 2014. The last 50 years has seen the most rapid rise in wages with a 3,263% (7.4% a year) increase since 1965, reflecting the improvement in productivity growth experienced in the past half-century.
In real terms, wages have grown 18 fold since 1765 (1,684%), at an average annual rate of 1.2%. The average weekly wage has risen from £26.93 in 1765 to £480.42 in 2014 at today’s prices. These figures clearly show how real wage growth is driven by productivity improvements over the long-term.