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Demographic decline, EU recovery funds, and shifting economic dynamics put Rome ahead of London
For the first time since 2001, Italy has surpassed the United Kingdom in terms of GDP per capita, according to the latest data from the World Bank. The milestone marks a reversal in a rivalry that has seen Britain consistently outpace Italy for more than two decades. The shift has been described by the Telegraph as a “wake-up call” for Prime Minister Keir Starmer, raising questions about the long-term direction of Britain’s economic policy.
At the end of 2024, Italy’s GDP per capita stood at $60,847 (€56,100 / £44,835), compared to $60,620 (£44,655) in the UK. The difference is marginal, but symbolically powerful: after years of underperformance, Italy now finds itself in a position it last held briefly in the late 1980s and again in the early 2000s.
A Historical Rivalry
This is not the first time Italy has overtaken the UK in economic terms. In 1987, Italy briefly outpaced Britain in GDP per capita, a moment that became emblematic of the country’s industrial strength and postwar growth. That advantage lasted until the early 2000s, when Britain’s financial sector and labor market reforms helped it leap ahead.
The two economies have since diverged in different ways. The UK has grown more reliant on services, particularly finance and technology, while Italy has struggled with sluggish productivity, high public debt, and recurring political instability. Yet today, structural factors—including population trends, EU funding, and fiscal reforms—have tilted the balance back in Italy’s favor.
The Role of Demographics
Perhaps the most decisive factor in the current reversal is demography. Britain’s population has continued to expand, fueled by immigration and a relatively higher birth rate, while Italy has faced a shrinking and aging population for more than a decade.
Although a declining population poses long-term challenges for labor markets and pensions, in the short term it mechanically boosts GDP per capita. With fewer residents, the same overall output is divided among a smaller base, making Italians appear, on average, “richer” than their British counterparts—even though the aggregate growth of the Italian economy remains modest.
As analysts have pointed out, the comparison highlights more the distribution of wealth than the absolute strength of either economy. George Buckley, chief economist for the UK and euro area at Nomura, told Bloomberg that while the UK will outperform Italy in four of the six years between 2021 and 2026 in terms of total GDP growth, Italy will lead in per capita terms throughout the same period.
The Impact of the PNRR and Fiscal Policy
Italy’s position has also been buoyed by the National Recovery and Resilience Plan (PNRR), funded through the EU’s post-pandemic recovery mechanism. Billions of euros have flowed into infrastructure, digitalization, and green transition projects, giving the Italian economy a temporary lift that has been reflected in household wealth and productivity indicators.
Prime Minister Giorgia Meloni’s government has also enacted policies to cut labor taxes and tighten migration flows, which, though politically controversial, have played a role in shaping the country’s short-term economic profile. While many observers caution against over-crediting government action, the PNRR has undeniably injected momentum into a system often criticized for stagnation.
A Warning Sign for the UK
The reaction in the UK has been muted, but not indifferent. British media outlets have portrayed the overtaking as an indicator of underlying weaknesses in the domestic economy. The cost-of-living crisis, sluggish productivity, and Brexit-related trade frictions have combined to erode the UK’s relative position.
For Prime Minister Starmer, who came to power promising economic renewal, the comparison with Italy carries political weight. A once-struggling southern European economy is now outpacing Britain on a metric that resonates strongly with the public: individual prosperity. The Telegraph noted that the figures should serve as an alarm bell, urging the government to rethink its growth strategy.
Europe’s Broader Context
The overtaking comes at a time when Europe as a whole is struggling to maintain momentum. Eurostat reported that the EU economy grew by just 0.2% in the second quarter of 2025, reflecting weak industrial output and subdued consumer demand.
Against this backdrop, Italy’s relative outperformance is more a statistical anomaly than a sign of deep structural transformation. Still, the comparison with the UK has rekindled debates about economic models, demographic policies, and the role of EU solidarity in supporting weaker economies.
Looking Ahead
Italy’s new position ahead of the UK in GDP per capita is as much about arithmetic as it is about resilience. A shrinking population has magnified per capita wealth, while EU recovery funds have offered a temporary cushion. Yet serious challenges remain: low birth rates, high debt, and sluggish productivity could all undermine the gains in the long run.
For the UK, the message is more urgent. With a growing population but faltering productivity, London risks slipping further behind unless it finds ways to reignite growth.
The latest data is therefore less a celebration for Italy than a warning for Britain—a reminder that prosperity is not guaranteed, and that policies on demographics, innovation, and fiscal discipline will define who leads Europe’s economic rankings in the decades ahead.
Alessandro Fiorentino