Britain will be well placed as the world economy emerges from the pandemic in the coming years, according to a new forecast published today. In its annual world economic league table, the Centre for Economics and Business Research (CEBR) predicted that global gross domestic product will top $100 trillion (£75 trillion) for the first time ever in 2022 — two years earlier than the consultancy expected a year ago.
However, the CEBR also warned that should inflation become embedded, it could take another global recession to force it out again.
The table still sees China becoming the biggest economy in the world, but now not until 2030; the CEBR’s previous forecast was 2028. India, hit hard by the pandemic, will become the world’s third-largest economy — after China and America — by the early 2030s, while Germany is on course to develop a bigger economy than Japan by the early 2030s.
While the UK will be overtaken by India in 2023, according to the CEBR, that is predicted to be the only place it loses in the world league table. Controversially, as last year, the CEBR sees the UK prospering much more than France, despite Brexit. It forecasts that the UK economy, marginally bigger than France’s now, will be 16 per cent larger by the mid-2030s. The UK will hold sixth place in the table until well into the 2030s, from fifth now, despite the rapid rise predicted for many Asian economies, including Indonesia, Vietnam, the Philippines and Bangladesh.
The report also examines the cost of shifting to net zero. “We currently estimate additional costs to consumers of $2 trillion a year on average over the forecast period to pay a share of the net additional investment to decarbonise,” it says. “With substantially reduced investment in fossil fuels, we now think that their prices will hold up in the medium term because of reduced supply.”