(Bloomberg) -- The UK will outperform its struggling European peers in the next 15 years, helping it to cling onto its place among the world’s biggest economies, according to long-term projections.
Britain and France will remain in sixth and seventh position by 2039, respectively, as Germany, Italy and Spain slip down the leaderboard, the Centre for Economics and Business Research predicted.
The upbeat assessment will be welcomed by Prime Minister Keir Starmer after official figures this week showed the economy has failed to grow since his Labour government took power in July. Survey data point to a dismal final quarter that is expected to spill over into 2025.
Starmer is hoping his plans to deliver the fastest sustained growth in the Group of Seven, through a blitz of planning reforms, housebuilding and public investment, will eventually pay dividends after a rocky start for Labour. However, CEBR suggested that problems will continue to hamper the British economy.
“While this outlook is markedly better than key European peers like France and Germany, both of whom are expected to slip, this reflects a relatively poorer outlook for Eurozone economies rather than strong UK growth,” CEBR said.
CEBR expects Britain to narrow the gap with the poorer-performing German economy over the next 15 years. Europe’s largest economy is expected to be 20% larger than the UK’s in 2039, compared to being 31% bigger now. Similarly, Britain will outpace France and be 25% larger in terms of output by 2039.
While CEBR warned that Labour’s tax hikes will mean weaker activity growth in the short-term, it expects the trend growth rate to hit 1.8% in the longer run.
It expects the US to retain its crown as the world’s largest economy, holding off competition from China.
“We do expect China to eventually claim the top spot, though structural and demographic constraints suggest its tenure as the global economic leader will be brief,” said Sam Miley, CEBR managing economist and forecasting lead.
On a per-capita basis, the UK is forecast to edge up a position to 21st place, just behind Malta, Germany and Sweden. Luxembourg is projected to remain the world’s richest country per capita, followed by Ireland and Switzerland.
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