The UK Treasury has published a forensic analysis of the American economic juggernaut, and its conclusions are as uncomfortable as they are illuminating. For years, pundits have predicted the imminent collapse of the US economy under the weight of debt, political polarisation and global competition. Yet it keeps growing, outpacing every other advanced nation. The Treasury’s report, which I have read in full, suggests a simple but bitter truth: the United States has built a machine that rewards risk, punishes caution and treats failure as a data point rather than a catastrophe.
Let us begin with the obvious. The American labour market is not just flexible, it is ferocious. The Treasury notes that US firms can hire and fire with a speed that would be illegal in most of Europe. This creates churn, yes, but also dynamism. Workers in the US move jobs at twice the rate of their British counterparts, and each move tends to increase their wages. The report concludes that this fluidity allows the economy to reallocate resources to productive sectors within months, not years. In the UK, we have spent a decade trying to protect jobs in dying industries. The US lets them die and lets the workers find something new. It is brutal, but it works.
Second, and this is the part that keeps economists up at night, is the dominance of US equity markets. The Treasury analysis reveals that American companies raise capital through stock issuance at rates three times higher than European firms. This is not just about Silicon Valley IPOs. It is about the willingness of US households to own stocks directly or through pension funds. The report estimates that 58% of American families own equities compared to 18% in the UK. This creates a feedback loop: rising stock prices boost consumer confidence, which fuels spending, which drives corporate profits, which lifts stocks again. Europe and Britain, with their preference for bonds and bank deposits, have cut themselves out of this virtuous cycle.
Third, and most controversially, the Treasury points to immigration. The US has a porous border for high-skilled workers and a ruthless deportation system for low-skilled ones. It may sound harsh, but the result is a steady supply of engineers, doctors and entrepreneurs who start companies at nine times the rate of native-born Americans. The report notes that 55% of US unicorns (companies valued over a billion dollars) have a founder who is an immigrant or a child of immigrants. The UK, by contrast, has made it harder for foreign graduates to stay after university. We export talent; the US imports it.
Now let us be clear: this is not a celebration of American capitalism. The Treasury document is laced with warnings about inequality, social fragmentation and the looming threat of AI-driven job displacement. But it forces a reckoning. For fifteen years, British policymakers have assumed that the US model was unsustainable, that its luck would run out and that our slower, more inclusive path would prove superior. That day has not come. The gap is widening.
What can we learn? The report suggests three things. One, we must reform our labour markets not to become American, but to become faster. Two, we need to make equity ownership accessible to everyone, not just the wealthy. Three, we must fix our immigration system to attract the brains we need, not just the bodies we think we need.
Silicon Valley taught me to revere the vanguard, the risk-takers, the ones who break things. But I also saw the wreckage left behind. The US economy defies the odds because it has built a system that embraces creative destruction. The UK Treasury analysis is a mirror held up to our own caution. It is not flattering. But it is necessary.
