BRAZIL’S economy is now bigger than the UK’s, making it the second emerging market to enter the top-tier of world economies and heralding the beginning of the end of Western economic dominance.
Britain’s star is fading fast – the country now has the seventh biggest economy in the world, down from fourth in 2005, thanks to the long booms in China and Brazil.
The International Monetary Fund (IMF) expects France to fall behind Brazil by 2015, leaving the US and Germany as the only western economies in the top five.
The news will further fuel fears that the UK’s high tax, high regulation and high debt economic model is costing growth and jobs.
It will also rekindle the debate about what should be done to boost the UK’s competitiveness and to prevent a growing exodus of people and capital to emerging economies, where opportunities are now often much greater than in the high-unemployment West.
In US dollars, Brazil’s output in 2011 stood at $2.469 trillion (£1.57 trillion), some $49.2bn larger than the UK’s GDP of $2.42 trillion.
The emerging giant registered GDP growth of 2.7 per cent in 2011, far outstripping Britain’s 0.8 per cent. The lead is set to widen, with the IMF forecasting growth of three per cent this year against the UK’s 0.6 per cent.
However, Brazil’s 2011 growth rate is sluggish for a BRIC country – China’s economy expanded by 8.7 per cent, India’s by 6.1 per cent – and well below the 7.5 per cent seen in the country in 2010.
Yet there are hints the Brazilian economy is moving to a stronger footing. Merger and acquisition activity is up 177 per cent in the first two months of 2012 compared with the same period of 2011, and consumer spending registered healthy growth in the final quarter of 2011.
British politicians would consider growth of three per cent a nice problem to have. British GDP is still way below its pre-recession peak and estimates from the Office for Budget Responsibility (OBR) expect growth to reach the three per cent level by 2015-16.