UK Healthcare spend as % GDP since 1970 vs Germany, OECD

I’ve been somewhat dissatisfied with the way UK healthcare has been examined over the long term. There are relatively few reports* so I thought I would slowly do my own assessment. Unsurprisingly, it’s taking a long time fitting this in my night hours. But, I have a couple of conclusions worth sharing already. I will try and drip these out over the year. The first conclusion is compared to France and Germany (and most of UK’s G7 peers where we have OK data). The UK has extremely significantly underspend on healthcare. 

The overall summary is that the UK underspent on healthcare for the 50 year period of 1970 to 2020. The underspend vs Germany and France s between 2 to 4 percent points of GDP.

But what does this mean in dollar or pound terms?

The approx. gap in USD is 46,000 per person less spend cumulatively per person or in absolute terms this is GBP989,719m (based on UK ONS GDP figures). So in the order of GBP1,000bn or GBP1 trillion. Another guide is that 2pp of GDP over 50 years is about 1 year’s worth of GDP! (Only ball park due to inflation etc.)

To give you scale of this underspend vs Germany. If all this money was spent on hospitals, given an average hospital is about GBP500m, then this would have been >1900 more hospitals. Today the UK has 1200 – 1300 hospitals (900 in England).

So we would have over double the number of hospitals if this had been spent on capital!


Here is a chart of this, and you can play around with the other OECD data (above).

One point of knowing this is that there is no quick fix to this. The UK has recentlyclosed the gap with France and Germany, but after 50 years of below average spending, one can not expect the gap to close.

Now there may be lessons from Japan, US etc - as US has significant above average spending. But the first topline macro point is that GBP1 trillion underspend relative to Germany means UK can not easily simply catch up in a few years.

Life expectancy Race, child mortality and GDP

Looking at how life expectancy has risen globally and in a few countries over time.

A large driver of this has been the fall in childhood mortality.

This paints a picture that we’ve achieved much but we still have many challenges to go.

GDP is up. Ideas are up. But other aspects like natural capital are down. And deep poverty while down is still in the hundreds of millions.

UK life expectancy and healthcare spend vs OECD. NHS success story?

UK life expectancy expanded - in line with the OECD average (more or less, there was a little catch up) until recently where (like in a few countries) it seems to be flattening. This is a blunt but well understood measure of a population’s health.

A similar type of trend can be seen in childhood mortality. Although experts can gripe with the data, the overall trend is likely robust. There is also some catch up from OECD average from a poorer start.

This is a good achievement by the UK given what the UK has spent on healthcare since the 1970s.

My general observation here is that the UK has underspend / invested less in healthcare but has managed to obtain an average to above average results.

The under spend as % GDP has been 2 to 4 percent points lower than OECD peers on average. This has been going on since the 1970s. (The World bank data is from 2000, sourced from WHO)

There are many factors that combine to impact life expectnacy and health. Correlation is not causation.

However, I think there is enough data and evidence to suggest that given the amount the UK has invested in health (and social care and education) that if the UK wants to continue the positive trends in health, it will likely have to spend more or at current levels of spend the health out comes will - in my view - likely to continue to tail off.

In this sense, the UK’s NHS has been a unique system that has enabled outsized gains in health outcomes for the amount of spend over the last 50 years.

OECD data.

OECD data.

I can’t make a nice graph widget, but I can show how this % spend on GDP goes back to the 1970s. so this is arguably about 50 years of under spend, at even the lower end of 2% of GDP that’s somewhere in the region of £500bn to £1,000 bn (yes 1 £trillion) in culmulative under spend compared to what would have been spent on the OECD average %.

(Now whether it would have been well spent or what else the UK spent the money on is another debate - maybe the OECD over spent given its outcomes… but given the UK is uniquely low (though Italy is close in some years and has slightly worse outcomes broadly) .

You can see how Germany is approx matching the UK since 1970 on life expectancy and trend (OK it did slowly gain beofre mathcing), but was spending much more of GDP to achieve that.