This is from Gavyn Davies and Juan Antolin-Diaz:
We conclude that fiscal policy is responsible for a little less than half of the UK’s under-performance compared with the US, with much of the rest being due to the sluggish growth of UK export markets in recent years. The decline in UK oil production, and the possible under-recording of UK GDP in the official statistics, should also be taken into account. Therefore, while there is certainly some truth in the fiscal story, it is far from the whole truth.
So why the big difference with the U.S. performance?
We find that a large amount of the difference is explained by the fact that US export markets have grown much more strongly than UK markets over the past 5 years. This has been for two reasons. First, the UK’s greater exposure to the recession-hit markets of the eurozone has been very damaging, especially in the past two years. Second, and actually much more important, the UK’s lack of exposure to the rapidly growing markets in the emerging economies has been a major structural problem in recent years. The US, in contrast, has greatly increased its exposure to the emerging markets, notably in Latin America.