According to new projections by economists, the UK will be closing the gap with Germany and overtake France by 2020. A decade further on, the UK’s economy is likely to have leapfrogged by India but should remain sixth largest economy in the world by 2030.
These estimates are based on GRP at market exchange rates (see table below). The UK’s favourable demographics with a less rapidly ageing population and strong labour force participation rates are key drivers of these projections.
“The UK economy has regained its dynamism recently in contrast to France in particular. In the longer run, other emerging markets may overtake the UK, but only India looks set to do so before 2030 according to our latest projections based on GDP at market exchange rates,” Barret Kupelian, economist at PwC and co-author of the report, said.
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Beyond GDP
The report also assessed other indicators contributing to its findings. It noted that the UK has strengths in areas such as political, legal and regulatory institutions, including ease of doing business, and communications technology. The UK also scored relatively well on some economic variables such as unemployment and its relative growth and inflation performance also improved in 2013, which looks set to continue in 2014.
However the UK has weaknesses it needs to improve on, according to chief economist at PwC, John Hawksworth.
“The UK lags behind its peers in areas related to education, investment, trade deficits and income inequality. So the UK has clear strengths to build on, but also some underlying weaknesses to address even given its recent relatively strong economic recovery.”
