Economic welfare of individual contents several dimensions. Political freedoms, the social and cultural environment, freedom from fear of violence and the working environment are all the factors that indicate the movements in standards of living. Estimate of GDP pr capita provide the most simplistic and direct indication for measuring economic welfare of citizens. GDP per capita means GDP divided by the level of population.
‘National income is often used as the main indicator of the standard of living of an economy. A rise in GDP per head is used as indication of a rise in living standards.’ GDP measures national income in terms of output .GDP per head simply means the average output per head. The greater amount of output owned by people in average the more people are able to consume in average. Living standard goes up in turn. In addition, because the growth rate of population is very slow, we can just look at the movement in GDP when we judge the economic performance refers to GDP per head. Beside the growth rate of GDP, the level of GDP is also an important factor to be considered.
The overall trend of the UK’s GDP at constant price is upwards slopping. The GDP had increased from £224956m to £829517m between 1960 and 2000. The UK’s GDP in 2000 is approximately 3.5 times of its level in 1960. The GDP was growing steadily before 1975. Fluctuations emerged in the GDP graph afterwards. The first decline in the GDP happened in 1976,but it went up very quickly later. GDP in the UK declined again significantly at the beginning of the 1980s. This time it took longer to recover. There is a third shrink in UK’s GDP in the early 1990s.
Although the variation consistently exists in growth rate of GDP, a decrease in the level of GDP is still in line with a sharp decline in growth rate of GDP. Growth rate level in a real recession is falling far below the average. For instance, in 1976，1982 and 1992 the growth rates of GDP is below zero. Average growth rate of GDP in UK is 2.5%.