UK (COMMONWEALTH) The Centre for Economics and Business Research predicts that the UK will continue to rank as the sixth-largest economy in the world by 2039, outperforming its European peers during the following 15 years.
Germany, Italy, and Spain are predicted to fall in the worldwide rankings, but Britain will maintain its lead over France, which is predicted to stay in seventh place. The economic difference between the UK and Germany is expected to close; in 2039, Germany’s GDP will be 20% bigger than Britain’s, down from 31% currently.
This indicates a comparatively worse future, even though it is noticeably better than that of important European rivals like France and Germany, both of whom are predicted to falter. Instead of reflecting robust UK growth, this reflects a comparatively worse forecast for Eurozone economies, according to CEBR.
The release of the study coincides with the early months of Labour’s government, as Prime Minister Keir Starmer grapples with economic challenges. Since Labour came to power in July, there has been no economic growth, according to official figures, and survey results suggest that 2024 will end weakly and that 2025 will be even more difficult.
Starmer intends to revitalize the economy by accelerating growth through public investment, housing initiatives, and planning changes. CEBR cautions that recent tax increases may have an adverse effect on short-term activity. It anticipates that Britain’s trend growth rate will level off at 1.8% in the long run.
It is anticipated that the United States would continue to be the greatest economy in the world, overcoming challenges from China.
According to the Centre for Economics and Business Research (CEBR), Germany, Italy, and Spain will fall farther down the rankings by 2039, while Britain and France would still be in sixth and seventh place, respectively.
Prime Minister Keir Starmer will applaud the optimistic assessment after official data released this week revealed the economy has not expanded since his Labour government took office in July. The survey’s results point to a poor last quarter, which experts predict will persist into 2025.
After a difficult start for Labour, Starmer is optimistic that his ambitions to implement the fastest continuous growth in the Group of Seven—through a flurry of planning reforms, homebuilding, and public investment—will finally pay off. But according to CEBR, issues will persist in impeding the British economy.
According to CEBR, this indicates a comparatively worse picture for eurozone economies rather than robust UK growth, even though it is noticeably stronger than that of important European rivals like France and Germany, both of whom are predicted to falter.
Over the next 15 years, CEBR anticipates that Britain’s economy will catch up to Germany’s, which is performing worse. Predictions indicate that by 2039, Europe’s largest economy will surpass the UK’s by 20%, a significant increase from its current 31%.
According to the most recent official data, the UK economy grew nothing in the third quarter of 2024. The economy’s health is impacted by things like worker wage rises and the amount of taxes the government can levy to fund services.
Gross domestic product, or GDP, is a measure of all economic activity in a nation, including that of businesses, governments, and citizens.
Every month, the UK’s Office of National Statistics (ONS) releases updated GDP data externally. On the other hand, quarterly numbers, which span three months at a time, are thought to be more significant.
The majority of governments, corporations, and economists prefer steady GDP growth. This is because it typically indicates higher expenditure, the creation of new employment, higher taxation, and better pay increases for employees.
A declining GDP indicates a contracting economy, which can be detrimental to both people and businesses. A recession is when the GDP declines for two consecutive quarters. It may result in job losses and wage freezes.
When the GDP contracted in the latter two quarters of 2023, the UK briefly entered a recession. The first half of 2024 saw a recovery, with GDP rising 0.7% from January to March and 0.5% from April to June, externally.
The unanticipated decline, according to analysts, was caused by policies that were included in that month’s budget, such as raising the minimum wage and increasing employer national insurance contributions (NICs). The Organization for Economic Co-operation and Development (OECD), a powerful think tank, lowered its growth projection in early December.
