What happened
Economic data indicates that Canada and Europe are falling behind the US in terms of prosperity, with a widening gap in GDP per capita over the past decade and a half. The gap is attributed to slower productivity growth, weaker business investment, and higher tax burdens in Canada and Europe compared to the US.
According to Visual Capitalist, Canada's GDP per capita tracked closely with the US through the early 2010s, but has since widened due to slower productivity growth. The C.D. Howe Institute reports that Canada's real GDP per capita has dropped about 1.4 percent since the second quarter of 2022, despite total real GDP growing by more than 5 percent.
In Europe, the GDP per capita gap with the US has grown from 14 percent in 2008 to 25 percent in 2024, according to an analysis by France's OFCE research institute. The gap is largely explained by the technology sector, where Europe missed much of the digital revolution, as well as high energy prices and complex bureaucratic requirements.
The decline in prosperity is also reflected in investment trends. In Canada, business investment per worker has declined by an average of 2.3 percent annually since 2014, compared to annual growth of 2.8 percent from 2000 to 2014. In Germany, inflation-adjusted business investment fell 0.9 percent in 2025, leaving it about 8 percent below its 2019 level.
Taxes are another factor contributing to the prosperity gap. OECD data shows that Canada, the UK, Germany, Italy, and France collect roughly 9 to 18 more percentage points of GDP in taxes than the US. Since 2010, the tax burden has risen in these countries, with Canada's tax burden increasing by 3.9 percentage points, Germany's by 2.8, and the UK's by 2.4.
