The UK will stay as one of the top six global economies for the next fifteen years, according to the latest annual report by the Centre for Economic and Business Research (CEBR).
In its world economic forecast, the consultancy firm said it expected the UK to achieve a trend rate of growth of 2.4 per cent annually between 2022-2026, which will slow down to 1.8 per cent between 2027-36.
During the fifteen-year window, CEBR anticipates India will rise to third place and overtake the UK economy by 2023.
However, the UK will only fall one spot from fifth to sixth, clinging to a leading global position despite the rise of Asian economies over the next two decades.
It will also remain well ahead of France – which will drop into seventh place.
The report anticipates that the UK’s economy will be 16 per cent larger than France’s economy by 2036, with its superior performance powered by a booming technology sector and its established position as a financial services leader.
Currently, the UK’s economy is sized at £2.1trn, which is only three per cent larger than its European rival.
While the report points to rising tensions over issues such as Scottish independence and the Northern Ireland Protocol, CEBR calculates that damage to the City from Brexit will be limited to just 10 per cent of its overall business.
Nevertheless, CEBR raises red flags over government spending to protect the economy during the pandemic.
While it considers the government’s fiscal response to be “largely sound”, it notes public debt as a share of GDP has reached 108.5 per cent in 2021.
With austerity increasingly unpopular, it says “unlocking growth in the post-COVID, post-Brexit era will be crucial in ensuring that the debt burden remains sustainable.”
Looking at the international picture, CEBR forecasts that the global economy will top $100trn (£75trn) for the first time next year – two years earlier than the consultancy expected in its previous annual report.
CEBR still expects China to become the world’s largest economy, but it does not expect the country to overtake the US until the end of the decade, rather than in 2028 as previously anticipated following the pandemic.
The report also suggests Germany is on course to have a larger economy than Japan by the 2030s, while consumers will face costs of $2trn a year over the next fifteen years as economies transition to net zero.