Britain has retaken fifth place in the rankings of the world’s biggest economies despite suffering one of the deepest recessions in the pandemic.
According to the annual league table produced by a leading British economics consultancy, the UK has leapfrogged India and will accelerate away from France in the decade after Brexit.
The Centre for Economic and Business Research (CEBR) also forecast China to overtake America as the world’s biggest economy in 2028, five years earlier than expected after a year in which Asia stole a march on the West by handling the pandemic better.
In comments that chime with government plans to align more closely with Asia, the CEBR said: “One lesson is that western economies need to keep much more closely in touch with what is happening in Asia to keep up with international developments.”
Britain had dropped behind India to be the sixth-largest economy last year but a deep pandemic-related recession and a steep fall in the rupee pushed the world’s second most populous country below the UK in dollar terms.
Britain is expected to have suffered the deepest recession of all G7 leading nations this year and many leading forecasters predict a slow recovery but the CEBR is more optimistic, with annual average growth of 4 per cent until 2025. The Office for Budget Responsibility (OBR), the government’s independent forecaster, expects 3.4 per cent average growth. It has estimated that the new UK-EU trade deal will cost 4 per cent in permanently lost GDP.
India will not overtake the UK again until 2024, the CEBR said. India “had been losing momentum even ahead of the shock” of the coronavirus and was “knocked off course” during the pandemic. Once India regains momentum, it will overtake Germany to be the world’s fourth-largest economy, behind the US, China and Japan, in 2027.
Britain will cement itself as Europe’s second-largest economy behind Germany in the coming decade after the Brexit deal, holding sixth place in the world league table through to 2035.
France remained the seventh-largest economy this year, two places behind the UK, where it is expected to stay until at least 2035. “By 2035, UK GDP in dollars is forecast to be 40 per cent more than that of France, its long-standing rival and neighbour,” the CEBR said.