Is Italy really doing better than Britain?

Spectator

8 hours ago

Dante's Beach, Ravenna
News that Italians now enjoy a higher standard of living than the British made me think: my God, life must be truly awful in Britain.
Yes, the Italians do have much to feel good about in terms of the quality of their lives thanks to the beauty of their country, the splendour of their history, culture and cuisine, and their impressive defence of the traditional family and way of life from the threats to them of the modern world.
But on the face of it the Italians would seem to have precious little to crow about on the economic front. Italy is the only G7 country, for instance, where real wages have not increased at all, and in some cases decreased, since the launch of the Euro in 1999.
I speak from personal experience. I gave up being a freelance journalist in Italy in 2015 because we ended up like hand-loom weavers in the industrial revolution with the arrival of the Spinning Jenny in 1764, paid worse than dishwashers and bog cleaners.
It happened overnight, more or less.
In 2003, when I first began a weekly column called Fumo di London (London Smoke) for an Italian national newspaper they paid me €350 net per column which was not bad by Italian standards. I also worked for a regional newspaper that paid much more because, in addition to a more frequent column called Zuppa Inglese (English Soup, a.k.a Trifle), I had an editing role as well.
But as a result of the internet revolution and the collapse of print journalism, accompanied as they were by the global financial crash, and then the Euro crisis, my national newspaper fee was halved, then slashed again.
So I quit. The regional newspaper, meanwhile, went bust.
Yet, apparently, regardless of tales of woe such as mine, Italy's GDP per capita, when adjusted for the difference in the cost of goods and services, has overtaken Britain's.
Last year, it rose to $60,847 (£44,888) ahead of Britain's $60,620 (£44,721) for the first time since 2001, according to World Bank figures. Prior to that, measured by this key yardstick, the Italians had enjoyed a better standard of living than the British since 1987 when their GDP briefly overtook Britain's. But that was before they signed up for the Euro.
The technical name for this standard of living yardstick is GDP per capita at purchasing power parity (PPP) and it measures purchasing power per person. GDP per capita, on the other hand, measures economic output per person.
But trust me. I speak as one who has lived in Italy for nearly 30 years: there is no way that the superior purchasing power of Italians is related to their wages.
This can be seen by looking at jobs which have not suffered devastating change, as has freelance journalism, such as waitering.
My eldest son Francesco Winston, 20, is working this summer as a waiter in a restaurant by the sea in the village a mile from our house. He does a five-hour evening shift, five days a week, a double shift on Sundays, and has one day off. He gets €1,400 (£1,208) a month net for this and it's regarded as a good wage in Italy, especially as he has a proper contract. Such contracts are like gold dust because they guarantee national insurance contributions and tax are paid and employers try every trick in the book to avoid handing them out.
He's certainly far better off than my second eldest daughter, Magdalena, 17, whose summer job this year is in the village bakery, where she does a seven-hour shift, six days a week, She gets paid an obscenely low €5 (£4.32) an hour for four hours of each shift in regola – i.e on a proper contract, however inhuman – and for the other three hours €9 an hour in nero, i.e. contractless. But Francesco Winston's wage, let alone Magdalena's, would be regarded as a pittance in Britain.
So the most important reason why Italy's GDP per capita at PPP is higher than Britain's is because the cost of living in Italy is much lower.
Things that matter, especially, are far cheaper. When I'm drinking, which I am not at the moment, I buy a superb local Sangiovese for €2.60 a litre dispensed into plastic mineral water bottles from a huge cask in a wine shop in Ravenna run by a man whose nickname is God.
On a rare visit to London the other day, I went to El Vino's in Fleet Street for old time's sake where I used to be a familiar face in the 1980s and 1990s. I can't for the life of me remember what it cost in those days to get sloshed in EV1, as we used to call it, but nowadays a bottle of house red costs £28.95, a glass £7.80. I struck up a conversation with a striking blond-haired woman from New Zealand at the next table, a university lecturer specialising in the rights of rivers, as it happened, and her friend, a Maori tribal leader, who spent his time punching my arm and hugging me, as if he were itching to get me on the ground for a spot of wrestling.
I used to smoke 60 a day – Camel Yellow soft pack – until they took me to death's door and I stopped in 2019. In Italy they still only cost €5.70 a pack, compared to £17.75 at Tesco's.
In the bar we frequent in the village, where my youngest daughter Rita, 16, is working (she's paid €9 an hour in regola), an espresso brought by her to your table will cost you €1.20 and a cappuccino €1.50, compared to £1.95 and £4.40 at a Costa coffee shop in Britain.
The most expensive fish dish on the menu at Francesco Winston's restaurant, a grigliata mista di pesce, costs €28, an entrecote steak €18, a plate of taglietelle al ragù €8 or spaghetti con vongole €13. The most expensive pizza is €9, the cheapest €5.50. A litre of house red or white (still or fizzy) is €10, and bottles €14 to €22.
Unquestionably, that's a heck of lot cheaper than an equivalent restaurant in Britain. On my recent trip, I had dinner with my niece in the village pub near my recently-deceased father's home in Limpsfield Chart, Surrey, and it cost £106 for what looked like a regurgitated beetroot salad and a burger which was as black as the plague plus a couple of bottles of sort-of-okay wine (my new rule is I am allowed to drink when away from Ravenna).
What else? A second-class train ticket from London to Edinburgh costs £162 to £253, the equivalent ticket from Rome to Milan a mere €102 to €139.
Italy's health service is far more efficient than Britain's, though only treatment is free, not tests.
Okay, so the Romagna where I am is not Tuscany which pullulates with foreign-owned stone farmhouses. But a pleasingly spacious restored one in the countryside in my neck of the woods will cost you just €350,000 (£300,000). In Ravenna itself, outside the old city, one bed flats can be rented for €500 a month.
Italy's economy remains very sluggish – but so does most of Europe's. GDP grew in 2024 by only 0.7 per cent and this year is forecast by the OECD to grow by only 0.6 per cent (compared to 0.6 per cent in France, 0.4 per cent in Germany which last year was in recession, but 1.3 per cent in Britain).
At 136 per cent, Italy's public debt as a proportion of GDP, remains astronomically high (second only to Greece in the EU and in the world's top ten) but remains relatively static while France (111 per cent) and Britain (97.6 per cent) steadily catch up.
But since Giorgia Meloni's right-wing coalition came to power in October 2022, one million full time jobs have been created in Italy, by among other things cutting taxes and abolishing long-term unemployment benefit for all except those with non-working dependents.
The all-important spread between the interest rates paid on Italian and German government ten-year bonds has plummeted from 236 when Meloni came to power to just 83. The lower the spread between the Italian and the German bonds the more confident the markets are in the stability of Italy's economy.
Italy's first female Prime Minister already heads the fourth longest lasting of the country's 69 governments since the fall of fascism in 1945 – just over one a year. If she survives another year, as looks likely, her government will become the longest lasting of all.
Significantly, her government has also slashed the budget deficit from 8.1 per cent when she came to power to 3.4 per cent in 2024.
Italy's inflation rate at 1.7 per cent is much lower than Britain's which is 3.6 per cent and expected by the Bank of England to increase to 4 per cent in September.
Unemployment among young Italians under the age of 24 is still very high at around 20 per cent nationwide and much higher in the deep south. But overall unemployment has decreased to a historic low of 5.9 per cent – 1.6 million people – compared to only 4.7 per cent in Britain – 1.7 million people.
But that unemployment figure for Britain is deceptive because in total 6.4 million are on out-of-work benefits: and the unemployment figure only includes those looking for work.
The other reason for Italy's higher standard of living is that while Britain's population has rocketed by ten million (17 per cent) since 2000 as a result of mass immigration, most of it perfectly legit, Italy's has declined by 1.5 million since 2014. Italy has far more migrants arriving by boat and pretending to be refugees than Britain but the number of legal immigrants it takes in is dwarfed by the millions who have arrived in Britain. Britain's fertility rate, like that in most European countries, is not much higher than Italy's but its population, thanks to immigration, is expected to grow to 78 million by 2050.
If a country's GDP remains the same, and its population goes up, then its GDP per capita goes down, as it is measured by dividing GDP by population. But if its population goes down then its GDP per capita goes up.
I'm not an economist, as is obvious, but this does seem to challenge the default view of the experts that without a growing population a country is doomed.
Of one thing, I am sure. I would not come back to Britain – even if you paid me. I'll just have to make do with working for British and foreign newspapers and magazines from Dante's Beach.