#germany – Martin Wheatcroft

ICAEW chart of the week: Global GDP

My chart for ICAEW this week looks at the relationship between population and GDP around the world.

A three column chart each adding up to 100% with the central bar showing percentages of the global population, the left-hand bar showing percentages of market GDP. and the right-hand bar showing percentage of power-purchasing-parity (PPP) GDP. The bars are linked with lines to emphasise the relative proportions.

US & Canada: Market GDP 29% - Population 5% - PPP GDP 16%.
Europe: Market GDP 23% - Population 7% - PPP GDP 18%.
China: Market GDP 17% - Population 17% - PPP GDP 20%.
Rest of the world: Market GDP 24% - Population 28% - PPP GDP 30%.
South Asia & China: Market GDP 7% - Population 43% - PPP GDP 16%.

27 Jun 2025. Chart by Martin Wheatcroft. Design by Sunday. Source: IMF, 'World Economic Outlook Database, Apr 2025'.

According to the latest World Economic Outlook Database published by the International Monetary Fund in April 2025, the 387m people that live in the US and Canada, some 5% of the global population of 8.1bn, are together expected to generate about 29% of global economic activity as measured by GDP converted at market exchange rates in 2025.

The US – the largest economy in the world – is expected to generate 27% with 4.3% of the global population, while Canada with 0.5% of the world’s people represents 2% of the global economy.

My chart this week also shows how the US and Canada together constitute 16% of the global economy using GDP converted on a Purchasing-Power-Parity (PPP) basis that adjusts for the relative cost of living between countries. The US is the world’s second largest economy on this basis with 15% of total economic output, while Canada represents 1.3% of the total.

Europe’s 602m people are 7% of the global population (excluding Russia, but including Georgia) and are expected to generate around 23% of global economic output at market exchange rates in 2025 or around 18% on a PPP basis.

This includes the 452m people or 5.6% of the total living in the EU that generate 18% of global output or 14% on a PPP basis, the second largest economy on a market exchange rate basis and the third largest after adjusting for purchasing power. Germany with 1% population generates 4.3% and 3% of market GDP and PPP GDP respectively, followed by France (0.8% generating 2.9% and 2.2%), Italy (0.7% generating 2.2% and 1.8%), Spain (0.6% generating 1.6% and 1.4%), the Netherlands (0.2% generating 1.2% and 0.7%) and Poland (0.5% generating 0.9% and 1%).

Outside the EU, the 70m people in the UK, 0.9% of the world’s total, generate 3.4% of global economic activity on a market exchange rate basis and 2.2% on a purchasing power basis.

China’s 1.4bn people constitute 17% of the world’s population and generate 17% of market GDP, in effect the average level of global economic activity on a per capita basis at current exchange rates. However, on a cost-of-living adjusted basis, they are the world’s biggest economy at 20% of PPP GDP and above average on a per capita basis.

The chart groups the rest of East Asia, South East Asia, Oceania, the Middle East, Russia, Central Asia, Latin America and the Caribbean into a ‘rest of the world’ category with 2.3bn people or 28% of the world’s population. They generate 24% of the global economy on a market exchange rate basis and 30% on a purchasing power basis.

This category includes the 10 ASEAN countries in South East Asia that together make up 8.5% of the world’s population, 3.6% of market GDP and 6.4% of PPP GDP led by Indonesia (3.5%, 1.2% and 1.4%). Others include Japan (1.5% population, 3.6% market GDP and 3.3% PPP GDP), Russia (1.5%, 2.3% and 3.5%), Türkiye (1.3%, 1.1% and 1.8%), Mexico (1.6%, 1.6% and 1.6%), South Korea (0.6%, 1.6% and 1.6%), Australia (0.3%, 1.5% and 1%), Brazil (2.6%, 1.0% and 2.4%), Taiwan POC (0.3%, 1% and 0.8%) and Saudi Arabia (0.4%, 0.8% and 1%).

The final category is South Asia and Africa, which together include many of the poorest countries on Earth, with 43% of the global population but just 7% of the global economy based on market exchange rates and 16% on a cost-of-living adjusted basis.

South Asia’s 2bn people are 24.3% of the world’s population, generating 4.4% of market GDP and 10.3% of PPP GDP. This includes India’s 1.5bn people (17.9% of the global population generating 3.6% and 8.5% respectively), the world’s fifth largest national economy at market exchange rates behind the US, China, Germany and Japan, and the third largest on a PPP basis behind China and the US. It also includes Pakistan (3% of the world’s people generating 0.3% and 0.8% of economic activity) and Bangladesh (2.1% generating 0.4% and 0.9%).

Africa’s 1.5bn people constitute 18.3% of the world’s total, generating just 2.7% of market GDP and only 5.3% of PPP GDP. This includes South Africa (0.8%, 0.4% and 0.5%), Egypt (1.3%, 0.3% and 1.1%), Nigeria (2.9%, 0.2% and 0.8%), Ethiopia (1.4%, 0.1% and 0.2%) and the Democratic Republic of the Congo (1.3%, 0.1% and 0.1%).

The chart illustrates how economic activity, both before and after adjusting for purchasing power, is weighted towards the US and Europe, while South Asia and Africa have a long way to go to become as prosperous.

While this may seem a stiff mountain to climb economically, China’s transformation over the last 30 years provides an example of what is possible, especially as ageing populations in many developed countries reduce their ability to grow as quickly as those countries with much younger demographics such as in South Asia and Africa.

As they say, watch this space.

This chart was originally published by ICAEW.

ICAEW chart of the week: NATO defence spending

Our chart this week looks at how much NATO members would need to spend to meet President Trump’s proposed new target of 5% of GDP for defence and defence-related expenditure.

A two column chart showing NATO defence spending.

Left hand column - USA: £732bn defence spending in 2024, £67bn defence spending to 3.5% of GDP, and £342bn defence-related spending to 5.0% of GDP = £1,141bn total.

Right hand column - Europe and Canada: £408bn defence spending in 2024, £36bn defence spending to 2.0% of GDP, £271bn defence spending to 3.5% of GDP, and £301bn defence-related spending to 5.0% of GDP.

6 June 2025. Chart by Martin Wheatcroft FCA. Design by Sunday. Sources: NATO, 'Annual Report 2024'; ICAEW calculations.

According to NATO, the US and other NATO members spent 3.2% and 2.0% of GDP respectively on defence and security in 2024, with 21 countries meeting NATO’s target of a minimum spend of 2.0%, 10 countries falling short and one (Iceland) for which the guideline does not apply.

Our chart this week illustrates how those 10 countries falling short would need to have spent an additional £36bn in 2024 to reach the 2% of GDP minimum, while the US and NATO Europe and Canada members (including Türkiye) would have needed to spend a further £67bn and £271bn respectively to reach President Trump’s proposed new minimum of 3.5% of GDP.

The chart also shows how the US and other NATO members would need to spend £342bn and £301bn respectively on defence-related expenditure to reach a headline percentage of 5% of GDP. The definition of this spending has yet to be clarified and so it is difficult to know how much of this will be incremental and how much will be met by existing expenditure on infrastructure, security, law enforcement and other public services.

The consequence of a 5% headline target would have been total defence and defence-related expenditure of £2,157bn in 2024 numbers, comprising £1,141bn of spending by the US and £1,016bn of spending by other NATO members.

The 10 countries that would need to have spent more to meet the existing 2% NATO minimum in 2024 are Spain (£10bn), Canada (£9bn), Italy (£9bn), Belgium (£4bn), Netherlands (£2bn), Portugal (£1bn), Slovenia (£0.4bn), Luxembourg (£0.3bn), Croatia (£0.1bn) and Montenegro (£18m).

To reach a 3.5% defence expenditure target would require a substantial expansion in defence budgets with defence expenditure in the US going up by £67bn, Germany by £51bn, France by £37bn, the UK by £33bn, Italy by a further £28bn, Canada by a further £26bn, Türkiye by £15bn, Netherlands by a further £14bn, and Belgium by a further £8bn, with most other countries needing to increase their defence budget, too.

The sole exception is Poland, which already spends more than 3.5% of GDP on defence (4.1% in 2024), while Estonia (3.4%), Latvia (3.4%), Lithuania (3.1%) and Greece (3.0%) each have much less far to go to reach a 3.5% of GDP target than most other NATO members.

According to NATO, the UK spent £66bn or 2.3% of GDP on defence and security in 2024, but this includes expenditure on the security services, counter-terrorism policing and war pensions in addition to ‘pure’ defence expenditure of £57bn or 2.0% of GDP. Whether, and to what extent, these extra elements will end up being reclassified from defence to defence-related expenditure is unclear, but if all of it was then that would add £9bn to the £33bn a year that the UK would need to find to meet a 3.5% defence expenditure target.

The key question will be how long NATO members are given to meet their new targets. The 2.0% minimum guideline was set in 2014 and provided 10 years for members to reach their new targets. Even then, not all of them achieved it.

It is likely to take years to recruit and train significant numbers of new soldiers, sailors and aircrew and procure major items of equipment such as tanks, ships, submarines and aircraft that would be commensurate with such a new target, so even if the money was available immediately (which it won’t be in most cases) most NATO members are likely to resist calls by the US to adopt a new target with effect from 2026.

Whatever happens, it is clear that most NATO members, including the UK, are going to need to increase spending on defence significantly over the next few years – and at a much faster pace than most of them have budgeted for.

Tax rises and more borrowing are therefore likely to be on the agenda in many more countries than the UK alone.

This chart was originally published by ICAEW.

ICAEW chart of the week: Gold

With President Trump planning to visit Fort Knox to check up on the US government’s gold reserves, my chart for ICAEW this week looks at just how much gold is owned by governments around the world.

According to the latest statistics from the World Gold Council, sourced principally from the International Monetary Fund (IMF), governments and international financial institutions around the world own 35,864 tonnes of gold. Much of this gold sits in the Bank of England, Fort Knox and in central bank vaults around the world.

At a price of around £74 per gram, the total value of ‘government gold’ adds up to somewhere in the region of £2.7trn. This is estimated to be around one-sixth of the total above-ground stock of gold in the world.

While the US is the largest individual holder of official gold reserves with 8,133 tonnes of gold worth around £600bn, the 27 countries of the EU and the European Central Bank collectively own a total of 11,719 tonnes of gold worth approximately £870bn. This includes Germany with 3,352 tonnes, Italy 2,452 tonnes, France 2,437 tonnes, Netherlands 615 tonnes, the European Central Bank 507 tonnes, Poland 448 tonnes, Portugal 383 tonnes, Spain 282 tonnes, Austria 280 tonnes, Belgium 227 tonnes, Sweden 126 tonnes, Greece 115 tonnes, Hungary 110 tonnes, Romania 104 tonnes and other EU member states with 281 tonnes.

The next biggest holder of gold is the IMF with 2,814 tonnes (worth around £210bn), followed by Russia with 2,336 tonnes (£175bn), China 2,280 tonnes (£170bn), Switzerland 1,040 tonnes (£77bn), India 876 tonnes (£65bn), Japan 846 tonnes (£63bn), Türkiye 615 tonnes (£46bn), Taiwan 424 tonnes (£31bn), Uzbekistan 383 tonnes (£28bn), Saudi Arabia 323 tonnes (£24bn), the UK 310 tonnes (£23bn), Lebanon 287 tonnes (£21bn) and Kazakhstan 284 tonnes (£21bn).

The total for other countries adds up to 3,194 tonnes worth, or around £235bn or so, including Thailand 235 tonnes, Singapore 220 tonnes, Algeria 174 tonnes, Iraq 163 tonnes, Venezuela 161 tonnes, Libya 147 tonnes, Brazil 130 tonnes, Philippines 130 tonnes, Egypt 127 tonnes, South Africa 125 tonnes, Mexico 120 tonnes, Qatar 111 tonnes, South Korea 104 tonnes and the Bank for International Settlements 102 tonnes.

While the level of official gold holdings is partly driven by the economic size of the countries concerned, it also depends on their reserve strategies, with US, German, French and Italian gold holdings making up around 75%, 74%, 72% and 71% of their official reserves respectively, in contrast with 6%, 9%, 11% and 15% for China, Switzerland, India and the UK, for example.

President Trump’s plan to visit Fort Knox to personally inspect his nation’s gold holdings reflects one of the benefits of investing in a physical commodity such as gold – you can count gold bars, weigh them and check their purity, as well as admire its shiny quality. He may have a less satisfying experience in verifying any future strategic crypto-currency reserve, where entries in a ledger are somewhat more ephemeral.

This chart was originally published by ICAEW.

ICAEW chart of the week: UN budget contributions 2025

My chart for ICAEW this week looks at the assessed contributions of member states to the United Nations Regular Budget for 2025.

Pie chart showing proportion of contribution to the UN regular budget.

EU & EFTA nations 24.0%, USA 22.0%, China 20.0%, Commonwealth nations 11.6%, Japan and South Korea: 9.3%, Latin American nations 4.4%, Middle East nations 4.3%, Russia 2.1%, Rest of the world 2.3%.

14 Feb 2025. Chart by Martin Wheatcroft FCA. Design by Sunday. Source: United Nations, 'Regular Budget 2025 assessed contribution percentages'.

The United Nations is funded through a mix of assessed contributions from member states, voluntary contributions from both member states and others, and revenue generated from operations.

In 2023, total revenue for all UN entities comprised $67.6bn, of which $13.8bn was from assessed contributions, $46.8bn from voluntary contributions ($41.0bn earmarked and $5.8bn non-earmarked), and $7.0bn in revenue from operations.

Of the $13.8bn in assessed contributions from member states, $3.3bn in 2023 was for the core activities of the UN itself and our chart this week illustrates the assessed contribution percentages for 2025 for the $3.4bn UN Regular Budget set for 2025.

This highlights how European Union (EU) and European Free Trade Area (EFTA) nations have been assessed to pay 24.0% of the core budget in 2025, followed by the USA (22.0%), China (20.0%), Commonwealth nations (11.6%), Japan and South Korea (9.3%), Latin American nations (4.4%), Middle East nations (4.3%), Russia (2.1%), and the rest of the world (2.3%).

EU and EFTA national contributions are led by Germany (5.7%), France (3.9%), Italy (2.8%), Spain (1.9%), Netherlands (1.3%), Switzerland (1.0%), Poland (0.8%), Sweden (0.8%), Belgium (0.8%), Norway (0.7%), Austria (0.6%), Denmark (0.5%) and Ireland (0.5%). The remaining 18 EU and EFTA members (and three microstates) are expected to contribute a further 2.7% in 2025.

Of the Commonwealth nations, the UK (4.0%), Canada (2.5%), Australia (2.0%), India (1.1%) and Singapore (0.5%) contributed the most, with the remaining 49 members not including Cyprus and Malta (who are included in the EU in this chart) contributing a further 1.5%.

Japan (6.9%) and Korea (2.4%) are assessed to contribute 9.3% between them, while Latin American nations are down to contribute 4.4%, led by Brazil (1.4%), Mexico (1.1%) and Argentina (0.5%) with 1.4% coming from the rest.

Middle East countries are expected to contribute 4.3% between them, with Saudi Arabia (1.2%), Türkiye (0.7%), Israel (0.6%) and UAE (0.6%) being the largest. Another 11 Middle Eastern nations are down to contribute a further 1.2%.

Russia has been assessed to contribute 2.1%, while countries in the rest of the world are expected to put in a further 2.3%, of which Indonesia (0.6%) is the only one to contribute more than half a percent of the total assessment, with the remaining 68 member states collectively contributing a further 1.7% in total.

The assessed contributions for UN agencies and other activities vary from the percentages shown in the chart as they depend on which countries participate in each agency or activity and several other factors. For example, the US has been assessed to pay 26.2% of the UN peacekeeping budget in 2025 (higher than their 22% regular budget contribution), although the US is expected to pay only 25% because of a cap of 25% set by Congress. The UK and France are expected to pay 4.7% and 4.6% respectively (higher than their 4.0% and 3.9% regular budget contributions), while China has been assessed to pay 18.7% (lower than its 20.0% regular budget contribution).

Another example is the World Trade Organisation (WTO) where the US and China are assessed to contribute 11.4% and 11.2% respectively and most other nations contribute a larger share.

One big question for the UN in 2025 will be the extent to which the new US administration reduces the amount it pays to the UN compared with previous years. The total paid by the US was $13bn in 2023, comprising $3.2bn in assessed contributions and $9.7bn in voluntary contributions.

In theory, if the US leaves a UN agency, such as already announced departures from the World Health Organisation and the UN Human Rights Council, then the assessed contributions for the remaining members can be increased to compensate.

The White House has also announced that it is reviewing its membership of the UN Educational, Scientific and Cultural Organisation and that it will withhold a proportionate share of its regular budget contribution that goes towards the UN Relief and Works Agency for Palestinian Refugees in the Near East.

A bigger question will be the extent to which the US cuts its voluntary contributions to UN programmes. A substantial proportion of these voluntary contributions have traditionally come through the US Agency for International Development, where payments have recently been suspended.

This chart was originally published by ICAEW.

ICAEW chart of the week: Prime Minister’s salary

My chart for ICAEW this week illustrates how PM Keir Starmer’s £172,153 official salary entitlement would have been £305,770 if prime ministerial pay had kept pace with inflation since 2009.

Column chart showing the Prime Minister's actual salary, official salary and official salary extrapolated in line with inflation on 1 April between 2009 and 2024. See text for numbers.

26 Sep 2024. Chart by Martin Wheatcroft FCA. Design by Sunday. Sources: House of Commons research briefings; ICAEW calculations. (c) ICAEW 2024.

Prime ministerial pay has been in the news quite a lot in recent weeks for a range of reasons, leading our chart of the week to look at how the prime minister’s salary has evolved over the last 15 years.

As the chart illustrates, former PM Gordon Brown was entitled to a salary of £197,689 and had an actual salary of £193,885 on 1 April 2009, significantly higher than today’s current official salary of £172,153 or the actual salary of £166,786 taken by current PM Keir Starmer. This is despite cumulative inflation of 55% (3.0% a year on average) or an increase in MP base pay of 41% (2.3% a year) over the past 15 years.

The reasons for these reductions in prime ministerial salary are primarily the result of a voluntary pay cut to £150,000 taken by Gordon Brown in the run up to the May 2010 election, and a further cut of 5% to £142,500 adopted by incoming PM David Cameron.

Cameron maintained his pay at this level for the duration of his first term in office, converting his voluntary decision into a permanent change in 2012 (backdated to 2011) in how much he and his successors have been entitled to receive. The chart shows how Cameron accepted a pay rise following the 2015 general election, taking him from a salary of £142,500 on 1 April 2012 out of an official entitlement of £142,545 to £150,402 on 1 April 2016 out of £152,532.

Subsequent prime ministers have also exercised pay restraint by restricting increases in ministerial pay, or in not taking all of the increases to which they were entitled. As a consequence, Theresa May concluded her period as prime minister in 2019 on a salary of £154,908 out of an official salary of £158,754, while Boris Johnson and Liz Truss were on annual salaries of £159,584 in 2022, short of their full entitlement of £164,951.

Rishi Sunak concluded his period as prime minister on an official salary of £172,153 from 1 April 2024 onwards, being the amount to which Sir Keir Starmer is entitled to claim if he wanted. However, the politics of accepting pay rises is difficult – perhaps now more than ever – and so Keir Starmer has stuck with the £166,786 actual salary that his predecessor was on before the 2024 general election.

Our chart illustrates how the prime minister’s official salary has eroded in value over the last 15 years by calculating how it would have risen to £219,800 on 1 April 2012, £232,000 on 1 April 2016, £247,720 on 1 April 2019, £266,020 on 1 April 2022 and £305,770 this year if it had increased in line consumer price inflation instead.

There are arguments for using other indexes for this comparison, such as public sector pay, which if used would have led to an official salary of £299,060 on 1 April 2024 ; average GDP per capita, perhaps a better measure of national economic performance, would have resulted in an official salary of £301,530. Linking to overall average pay would have led to an official salary of £311,990 today, while maintaining its value in comparison with pay in the private sector would have delivered a potential pay packet for the PM of £334,360.

The requirement for successive prime ministers to approve their own pay has led to the opposite of what you might think would happen. Instead of raising their salary ever higher because they have the power to do so, political choices and pressures have led them instead to cut or freeze their pay at different points over the last 15 years, resulting in a significant erosion in prime ministerial pay in that time.

These choices have led to the UK paying its head of government substantially less than comparable leaders such as Australian PM Anthony Albanese’s annual salary of A$607,500 (£311,500), German Chancellor Olaf Scholz’s €348,300 (£290,250) or Canadian PM Justin Trudeau’s C$408,200 (£226,800).

Ironically, it might be the prime minister (and his successors) who could benefit most of all of our public servants by taking the power to set his own pay away and giving it to an independent pay review body instead.

This chart was originally published by ICAEW.

ICAEW chart of the week: Eurozone government bond yields

My chart for ICAEW this week is on the cost of government borrowing in the Eurozone, which on 4 September ranged from 2.17% for Danish 10-year bonds up to 3.59% for their Italian equivalents.

My chart this week is on the range of yields payable on 10-year government bonds by 18 out of the 20 countries in the Eurozone for which data is available.

The chart illustrates how investors in German 10-year government bonds (known as ‘bunds’) would have received a yield to maturity of 2.22% – or conversely the German government could have borrowed at an effective interest rate of 2.22% if issuing fresh debt at that point in time. Yields on German bunds are used as benchmark rates for government debt not just in the Eurozone, but globally.

Just one country in the Eurozone has a lower 10-year bond yield than Germany, which is Denmark at 2.17% on 4 September, which is a 0.05 percentage points or 5 basis points (bp) ‘spread’ below the benchmark bund rate.

While quoted yields move up and down all the time, sometimes by quite large amounts, spreads are much less volatile, providing an insight into how debt investors perceive the relative risks of investing in different countries’ sovereign debt.

The next lowest yields were the Netherlands at 2.51%, with a spread of 0.29 percentage points above bunds, and Finland at 2.59% (+0.37%). This is then followed by Ireland on 2.67% (+0.45%), Austria on 2.71% (+0.49%), Belgium on 2.80% (+0.58%), Portugal on 2.82% (+0.60%), France on 2.93% (+0.71%), Slovenia on 2.94% (+0.72%), Cyprus on 3.00% (0.78%) and Spain on 3.02% (+0.80%). There is then a small jump to Greece on 3.28% (+1.06%), Slovakia on 3.30% (+1.08%), Malta on 3.34% (+1.12%), Lithuania on 3.36% (+1.14%) and Croatia on 3.41% (+1.19%).

The highest yield for investors among Eurozone countries – and hence the highest borrowing cost for its government – is Italy with 3.59%, which is 1.37 percentage points above the effective interest rate at which Germany could in theory borrow.

Comparing the bond yields in the Eurozone provides an insight into the relative strengths and weaknesses of these countries’ public finances and economies given that they all share a currency, a central bank base interest rate (currently 3.75%), and are all in the EU Single Market and Customs Union. Comparing yields with other currencies, such as the UK’s 3.95% for example (not shown in the chart), needs to take other factors into account, such as the UK’s much higher central bank base rate of 5%.

The chart also reports the government debt to GDP levels of each country for the second quarter of 2024 according to Eurostat, which may help explain why Denmark (with debt/GDP of 34%) pays a significantly lower borrowing cost than Spain (109%).

However, debt/GDP doesn’t explain all of the differences, with the 10-year yield on Greek government debt (debt/GDP 160%) of 3.28% for example being significantly lower than the 10-year yield on Italian government debt (debt/GDP 138%) of 3.59%.

Not shown in the chart are Estonia (debt/GDP 24%) and Latvia (45%), both of which tend to borrow at shorter maturities.

The lack of a firm correlation between debt/GDP and bond spreads should not be surprising as debt/GDP is a relatively crude measure of public finance strength or weakness. It excludes most government assets and non-debt liabilities, the funded or unfunded nature of their social security systems, as well as a country’s medium- and longer-term economic prospects and the perceived stability of that country’s government. These are all factors debt investors take into account when deciding the level of risk that they are willing to accept when investing.

This chart was originally published by ICAEW.

ICAEW chart of the week: Global military spending

While the UK commits to increasing its defence and security expenditure, our chart this week looks at military spending around the world, which has reached $2.4trn.

Column chart

Global military spending
ICAEW chart of the week

Column 1: NATO

USA $916bn
UK $75bn
Rest of NATO $360bn
Total $1,351bn

Column 2: SCO and CSTO

China $296bn
Russia $109bn
India and other $106bn
Total $511bn

Column 3: Rest of the world

Other US allies $304bn
Ukraine $65bn
Other countries $212bn
Total $581bn

25 April 2024.
Chart by Martin Wheatcroft FCA. Design by Sunday.

Source: SIPRI Military Expenditure Database. Excludes Cuba, North Korea, Syria and Yemen.

© ICAEW 2024

Our chart this week is based on the latter, with SIPRI reporting that global military expenditure has increased to $2,443bn in 2023, a 6.8% increase after adjusting for currency movements. SIPRI’s numbers are based on publicly available information, which means that some countries may be spending even more on their militaries that are included in the database. SIPRI was unable to obtain numbers for military spending by Cuba, North Korea, Syria, Yemen, Turkmenistan, Uzbekistan, Somalia, Eritrea, Djibouti, and Laos.

Military spending is the news this week following the announcement by the UK government that it will commit to spending 2.5% of GDP on defence and security, the recent vote by the US Congress to provide $95bn in military aid to Ukraine ($61bn), Israel ($26bn) and Taiwan and others in the Indo-Pacific ($8bn), and the release of the Stockholm International Peace Research Institute (SIPRI) Military Expenditure Database for 2023.

More than half of that spending is incurred by NATO, with total military spending of $1,351bn, comprising $916bn by the US, $75bn by the UK and $360bn by other NATO members. Of the latter, $307bn was spent by the 23 members of the EU that are also members of NATO (including $67bn by Germany, $61bn by France, $36bn by Italy, $32bn by Poland and $24bn by Spain), while $53bn was spent by the other seven members (including $27bn by Canada and $16bn by Türkiye).

The Shanghai Cooperation Organisation (SCO) and the Collective Security Treaty Organisation (CSTO) are partially overlapping economic and military alliances convened by China and Russia respectively. China has the biggest military with $296bn spent in 2023, while Russia spent $109bn and other members spent $106bn (of which India spent $84bn).

We have categorised the rest of the world between other US allies which spent $304bn in 2023 (including $76bn by Saudi Arabia, $50bn by non-US members of the Rio Pact, $50bn by Japan, $48bn by South Korea, $32bn by Australia, $27bn by Israel and $17bn by Taiwan), Ukraine which spent $65bn, and $212bn spent by other countries for which SIPRI has data.

The numbers do not take account of the differences in purchasing power, particularly on salaries. That means China and India, for example, can employ many more soldiers, sailors and aircrew than NATO countries can for the same amount of money.

The Ukraine number also excludes $35bn in military spending funded by the US ($25bn) and other partners ($10bn) during 2023 that was not part of its national budget.

Global military spending is expected to increase further in 2024 as the international security situation deteriorates. This includes NATO members that plan to increase their defence and security spending to meet or exceed the 2% of GDP NATO minimum guideline set in 2014 to be achieved by 2024.

This includes the UK, which now plans to increase its spending on defence and security from 2.35% of GDP in 2023/24 to 2.5% of GDP by 2028/29, with suggestions from defence sources that setting a target of 3% of GDP may be necessary at some point in the next decade.

This chart was originally published by ICAEW.

ICAEW chart of the week: IMF Fiscal Monitor

Our chart this week finds that the UK is ranking highly in the IMF’s latest five-year forecasts for general government net debt.

Bar chart

General government net debt/GDP: 2029 forecast

Emerging and developing economies (green bars)
World (purple bar)
Advanced economies (blue bar)
UK (red bar)

Kazakhstan (green) 8%
Canada (blue) 13%
Saudi Arabia (green) 22%
Iran (green) 23%
Australia (blue) 24%
South Korea (blue) 29%
Türkiye (green) 30%
Indonesia (green) 37%
Germany (blue) 43%
Netherlands (blue) 43%
Nigeria (green) 47%
Mexico (green) 51%
Poland (green) 55%
Egypt (green) 56%
Pakistan (green) 61%
Brazil (green) 70%
World (purple) 79%
South Africa (green) 84%
Spain (blue) 92%
UK (red) 98%
France (blue) 107%
US (blue) 108%
Italy (blue) 136%
Japan (blue) 153%

18 Apr 2024.
Chart by Martin Wheatcroft FCA. Design by Sunday.
Source: IMF Fiscal Monitor: 17 Apr 2024.

©️ ICAEW 2024

The International Money Fund (IMF) released its latest IMF Fiscal Monitor on 17 April 2024, highlighting how public debts and deficits are higher than before the pandemic and public debts are expected to remain high. The IMF says: “Amid mounting debt, now is the time to bring back sustainable public finances”, commenting that as prospects for a global economic soft landing have improved, it is time for action to bring government finances back under control.

Our chart this week illustrates how the UK is one of the ‘leading’ nations in government borrowing, with general government net debt projected by the IMF to reach 98% of GDP by 2029, compared with 92.5% in 2023. (Note: general government net debt is different to the public sector net debt measure used in the UK public finances – the latter includes the Bank of England and other public corporations.)

The chart illustrates how the major countries with the largest debt burdens tend to be advanced economies, with Spain (92% of GDP), the UK (98%), France (107%), US (108%), Italy (136%) and Japan (153%) having debt levels close to, or exceeding, the sizes of their economies.

Some countries are in much better fiscal positions, with Germany expected to bring its general government net debt down to 43% of GDP by 2029, while the Netherlands (43%), South Korea (29%), Australia (24%) and Canada (13%) also have relatively low levels of public debt compared with other advanced economies.

Emerging market ‘middle-income’ and ‘low-income’ developing countries often have much lower levels of public debt than advanced countries, often simply because it is more difficult for them to borrow to the same extent as well as not having the same scale of welfare provision as richer countries to finance. Examples include Kazakhstan (projected to have a general government debt of 8% of GDP in 2029), Saudi Arabia (22%), Iran (23%), Türkiye (30%) and Indonesia (37%). However, that does not stop some emerging and developing countries borrowing more, such as Nigeria (47%), Mexico (51%), Poland (55%), Egypt (56%), Pakistan (61%), Brazil (70%) and South Africa (84%).

Not shown in the chart are China and India for which no net debt numbers are available. The IMF projects them to have general government gross debt in 2029 of 110% and 78% of GDP respectively, indicating how their public debts have grown substantially in recent years. However, without knowing their levels of cash holdings it is less clear where they stand in the rankings.

Also not shown is Norway, the only country with negative general government net debt reported by the IMF. Norway’s general government net cash is projected to reach 139% of GDP in 2029, up from 99% in 2023.

As with all metrics, there are some issues in comparing the circumstances of individual countries. Many countries will also have investments, other public assets, or natural resource rights that are not netted off against debt, while many will also have other liabilities or financial commitments that aren’t counted within debt. For example, the UK has significant liabilities for unfunded public sector pensions as well as even larger financial commitments to the state pension, either of which, if included, would move the UK above the US in the rankings.

The IMF believes that as the world recovers from the pandemic and inflation is brought under control, it is important for countries to start tackling the deficits in the public finances and start bringing down the level of public debt.

This may be difficult for countries such as the UK where significant pressures on the public finances mean public debt is expected to increase over the medium term rather than fall.

This chart was originally published by ICAEW.

ICAEW chart of the week: IMF World Economic Outlook Update

My chart for ICAEW this week illustrates how countries rank in the IMF’s latest forecasts for economic growth over 2024 and 2025.

IMF World Economic Outlook Update
ICAEW chart of the week

(Horizontal bar chart)

Legend:

Emerging markets and developing economies (green)
World (purple)
Advanced economies (blue)
UK (red)

Projected annualised real GDP growth 2024 and 2025

Bars in green except where noted.

India: +6.5%
Philippines: +6.0%
Indonesia: +5.0%
Kazakhstan: +4.4%
China: +4.3%
Malaysia: +4.3%
Saudi Arabia: +4.3%
Egypt: +3.8%
Iran: +3.4%
Thailand: +3.2%
Türkiye: +3.1%
World Output: +3.1% (purple)
Nigeria: +3.0%
Poland: +3.0%
Pakistan: +2.7%
World Growth: +2.6% (purple)
South Korea: +2.3% (blue)
Mexico: +2.1%
United States: +1.9% (blue)
Canada: +1.8% (blue)
Russia: +1.8%
Brazil: +1.8%
Spain: +1.8% (blue)
Australia: +1.7% (blue)
France: +1.3% (blue)
South Africa: +1.1%
United Kingdom: +1.1% (red)
Germany: +1.0% (blue)
Argentina: +1.0%
Netherlands: +1.0% (blue)
Italy: +0.9% (blue)
Japan: +0.8% (blue)

8 Feb 2024.
Chart by Martin Wheatcroft FCA. Design by Sunday.
Source: IMF World Economic Outlook Update, 30 Jan 2024.

(c) ICAEW 2024

Each January, the International Money Fund (IMF) traditionally releases an update to its World Economic Outlook forecasts for the global economy. This year it says that it expects the global economy to grow by an average of 2.6% over the course of 2024 and 2025 at market exchange rates, or by 3.1% when using the economists-preferred method of converting currencies at purchasing power parity (PPP).

The chart shows how the 30 countries tracked by the IMF fit between emerging market and developing economies, most of which are growing faster than the global averages, and advanced economies, which tend to grow less quickly.

The biggest drivers of the global forecast are the US, China and the EU, with both the US and China expected by the IMF to grow less strongly on average over the next two years than in 2023. This contrasts with an improvement over 2023 (which involved a shrinking economy in Germany) by the advanced national economies in the EU over the next two years – apart from Spain, which is expected to fall back from a strong recovery in 2023.

Growth in emerging and developing countries is expected to average 4.1% over the two years, led by India (now the world’s fifth largest national economy after the US, China, Germany and Japan), followed by the Philippines, Indonesia, Kazakhstan growing faster than China, followed by Malaysia, Saudi Arabia, Egypt, Iran, Thailand and Türkiye.

Nigeria, Poland and Pakistan are expected to grow slightly less than world economic output, followed by Mexico.

Russia, Brazil and South Africa are expected to grow less strongly, while Argentina is expected to grow the least, with a forecast contraction in 2024 expected to be followed by a strong recovery in 2025.

The strongest-growing of the advanced economies in the IMF analysis continues to be South Korea, followed by the US, Canada, Spain, Australia, France, the UK, Germany, the Netherlands and Italy, with Japan expected to have the lowest average growth. Overall, the advanced economies are expected to grow by an average of 1.6% over the next two years.

For the UK, forecast average growth of 1.0% over the next two years is expected to be faster than the 0.5% estimated for 2023, but at 0.6% in 2024 and 1.6% in 2025 we may not feel that much better off in the current year.

Of course, forecasts are forecasts, which means they are almost certainly wrong. However, they do provide some insight into the state of the world economy and how it appears to be recovering the pandemic.

For further information, read the IMF World Economic Outlook Update.

More data

Not shown in the chart are the estimate for 2023 and the breakdown in 2024 and 2025, so for those who are interested, the forecast percentage growth numbers are as follows:

Emerging market and developing countries:

Country	Average over 2024 and 2025	2023 Estimate	2024 Forecast	2025 Forecast
India	6.5%	6.7%	6.5%	6.5%
Philippines	6.0%	5.3%	6.0%	6.1%
Indonesia	5.0%	5.0%	5.0%	5.0%
Kazakhstan	4.4%	4.8%	3.1%	5.7%
China	4.3%	5.2%	4.6%	4.1%
Malaysia	4.3%	4.0%	4.3%	4.4%
Saudi Arabia	4.1%	-1.1%	2.7%	5.5%
Egypt	3.8%	3.8%	3.0%	4.7%
Iran	3.4%	5.4%	3.7%	3.2%
Thailand	3.2%	2.5%	4.4%	2.0%
Türkiye	3.1%	4.0%	3.1%	3.2%
Nigeria	3.0%	2.8%	3.0%	3.1%
Poland	3.0%	0.6%	2.8%	3.2%
Pakistan	2.7%	-0.2%	2.0%	3.5%
Mexico	2.1%	3.4%	2.7%	1.5%
Russia	1.8%	3.0%	2.6%	1.1%
Brazil	1.8%	3.0%	2.6%	1.1%
South Africa	1.1%	0.6%	1.0%	1.3%
Argentina	1.0%	-1.1%	-2.8%	5.0%

Advanced economies (including the UK):

Country	Average over 2024 and 2025	2023 Estimate	2024 Forecast	2025 Forecast
South Korea	2.3%	1.4%	2.3%	2.3%
USA	1.9%	2.5%	2.1%	1.7%
Canada	1.8%	1.1%	1.4%	2.3%
Spain	1.8%	1.1%	1.4%	2.3%
Australia	1.7%	1.8%	1.4%	2.1%
France	1.3%	0.8%	1.0%	1.7%
UK	1.1%	0.5%	0.6%	1.6%
Germany	1.0%	-0.3%	0.5%	1.6%
Netherlands	1.0%	0.2%	0.7%	1.3%
Italy	0.9%	0.7%	0.7%	1.1%
Japan	0.8%	1.9%	0.9%	0.8%

This chart was originally published by ICAEW.

ICAEW chart of the week: EU Budget 2024

My chart for ICAEW this week illustrates how Ireland has displaced Luxembourg in contributing the most to the EU Budget on a per capita basis.

EU Budget 2024
ICAEW chart of the week

Vertical bar chart showing contributions per person per month to the EU budget for 2024 by country (blue bars) and the EU average (purple bar).

Ireland: €53.20
Luxembourg: €50.70
Belgium: €44.10
Netherlands: €39.00
Denmark: €37.80
Finland: €31.30
Germany: €29.70
Slovenia: €28.90
France: €28.60
Austria: €28.50
Sweden: €25.20
EU average: €25.20
Italy: €24.40
Malta: €23.20
Spain: €21.80
Estonia: €21.70
Cyprus: €20.70
Czechia: €20.30
Lithuania: €20.00
Portugal: €17.80
Latvia: €16.90
Hungary: €16.20
Poland: €15.70
Greece: €15.40
Slovakia: €15.00
Croatia: €13.10
Romania: €12.00
Bulgaria: €10.50

25 Jan 2024.
Chart by Martin Wheatcroft FCA. Design by Sunday.
Sources: European Union, 'EU Budget 2024'; Eurostat, 'Population projections'; ICAEW calculations.

(c) ICAEW 2024

The European Union’s Budget for the 2024 calendar year amounts to €143bn, with national governments contributing €137bn and EU institutions generating the balance of €6bn. At a current exchange rate of £1:€1.17 this is equivalent to a budget of £122bn comprising national contributions of £117bn and other income of £5bn.

My chart illustrates how much national governments contribute to the EU budget on a per capita basis, ranging from Ireland contributing the most to Bulgaria the least. Ireland’s recent economic success has seen it overtake Luxembourg as the country with the highest GDP per capita, and hence the highest per capita contributor to the EU Budget.

The average contribution for the EU’s population works out at just over €302 (£258) per person per year or €25.20 (£21.50) per person per month, based on a total population of 453m living in the 27 EU member countries.

The chart shows how Ireland’s contributions are equivalent to €53.20 per person per month, followed by Luxembourg on €50.70, Belgium on €44.10, Netherlands on €39.00, Denmark on €37.80, Finland on €31.30, Germany on €29.70, Slovenia on €28.90, France on €28.60, Austria on €28.50, Sweden on €25.20, Italy on €24.40, Malta on €23.20, Spain on €21.80, Estonia on €21.70, Cyprus on €20.70, Czechia on €20.30, Lithuania on €20.00, Portugal on €17.80, Latvia on €16.90, Hungary on €16.20, Poland on €15.70, Greece on €15.40, Slovakia on €15.00, Croatia on €13.10, Romania on €12.00, and Bulgaria on €10.50.

Total contributions of €137bn amount to approximately 0.8% of the EU’s gross national income of €17.7trn. They comprise €25bn from 75% of customs duties and sugar sector levies, a €24bn share of VAT receipts, €7bn based on plastic packaging that is not recycled (providing countries with an economic incentive to reduce it), and €82bn calculated as a proportion of gross national income.

While the UK ‘rebate’ no longer exists, these numbers in the chart are net of the equivalent but proportionately smaller ‘rebate’ totalling €9bn that continues to go to Germany, Netherlands, Sweden, Austria and Denmark. The EU Commission had proposed removing it during the negotiations for the 2021 to 2027 multi-year financial framework but was unsuccessful in persuading these five countries to give it up.

The chart only shows the gross contributions paid by national governments – it doesn’t show the amount that comes back to each country through EU spending, whether in the form of economic development funding and agricultural subsidies, through science, technology, educational or other programmes, or through the economic benefits of hosting EU institutions. This will reduce the effective net contribution for most of the richer nations, while poorer member states will benefit by more coming from the EU than they are paying in.

The numbers also do not include €113bn (£97bn) of spending through the NextGenerationEU programme that is funded by direct borrowing by the EU. This is equivalent to additional spending of €20.80 per person per month that will need to be repaid over the next few decades – hopefully through the benefits of higher economic growth.

This chart was originally published by ICAEW.