UK economy expected to be 16% larger than France’s by 2036
Booming investment in high-tech industries is expected to help UK business growth overtake that of its neighbor and historic rival across the Channel, according to the annual Center for Economics and Business survey Research (CEBR). And the UK continues to benefit from the economic reforms carried out under Margaret Thatcher’s government in the 1980s, according to the study.
The findings come from the World Economic League’s annual table of independent trade forecasting think tank, which examines growth prospects for 193 countries.
Much to the embarrassment of French President Emmanuel Macron, research predicts the UK economy will be 16% larger than France’s by 2036.
He estimates that the UK economy, worth around Â£ 2.1 trillion, is already 3.6% larger than that of France.
Douglas McWilliams, Vice President of CEBR, said: âTechnology is the dynamic driver of economic growth and Britain invests more in this area than France and Germany combined.
âBetween half and three quarters of the UK’s economic growth has come from the tech sector. In contrast, Germany has a heavy inherited economy, based on car manufacturing and the like. “
He also warned that inflation is likely to become a growing problem for the global economy this year.
âThe important question for the 2020s is how the world economies cope with inflation, which has now reached 6.8% in the United States.
âWe hope that a relatively modest adjustment of the tiller will help control the non-transient elements.
âOtherwise, the world will have to prepare for a recession in 2023 or 2024,â he said.
UK has the fifth largest economy in the world
This year’s World Economic League Table estimates that the UK has the world’s fifth-largest economy with a gross domestic product of around Â£ 36,357 per capita.
The report predicts that Britain will drop to sixth in the rankings behind India in 2026.
France, currently the sixth largest economy in the world, is expected to fall to seventh position next year and remain in that position for the foreseeable future.
The research aims to jumpstart UK financial institutions into competition with France to attract highly qualified personnel.
According to CEBR research, a strong global recovery from the Covid pandemic and rising inflation will mean global GDP is expected to exceed US $ 100,000 billion for the first time in 2022.
The benchmark is expected to be reached two years earlier than the think tank predicted a year ago.
The slowdown in growth in China following the covid pandemic is also highlighted by the report.
Last year, the CEBR predicted that the Chinese economy would overtake that of the UK in 2028, but is now revising that predicted date to 2030.
India, after overtaking France and the UK in 2019, fell behind the UK in 2020 and further behind France in 2021.
The Asian giant is expected to regain 6th place from France in 2022, before overtaking the United Kingdom in 2023, a year earlier than the CEBR predicted 12 months ago.
India is then expected to make good progress to become the world’s third-largest economy in 2031, according to the think tank.
Indonesia, the fourth most populous country in the world, is expected to become the largest economy on the planet in 2036.
Vietnam has the fastest growing economy
The fastest growing economies in this year’s World Economic League rankings are Vietnam, dropping from 41st place in 2021 to 20th place in 2036; Bangladesh goes from 42nd to 24th and the Philippines from 37th to 25th.
This year’s CEBR report also warns that climate change is starting to have a significant impact on the global economy.
Storms, floods, forest fires and other climate-related events impose increasing costs on insurers.
Spending to decarbonise the global economy is also expected to impact the cost of living.
The CEBR estimates the incremental costs to consumers around the world at around two trillion US dollars per year on average over the forecast period to pay for a share of the net incremental investment in low-emission and zero-emission production methods episode.
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Kay Daniel Neufeld, Director and Head of Forecasting at CEBR, said: âOne of the hallmarks of this new forecast is its environmental focus.
âThe range of extreme weather events this year highlighted the environmental concerns that led to the commitments made at COP26.
âTo achieve the ambitious goal of decarbonising the global economy by the middle of the century, all countries must step up their efforts. Importantly, we have identified nearly 700 of the top 2,000 companies in the world that have made net zero commitments, many for 2030 or earlier.
âWe estimate that about five trillion dollars per year of additional investments in decarbonization will be necessary, although some of them will substitute for other investments.
âOf this amount, approximately two trillion dollars will be passed on to the consumer in the form of increased transport and energy costs. “
Karl Thompson, economist at CEBR, said: âWhatever the inflationary environment, we expect technology to be the big winner in the years to come.
âDecarbonization, the challenges of hybrid work, and likely long-term skills shortages mean that for many companies, heavy investments in technology will likely be the only solution.
âWe have identified nine technology sectors where the skills required will likely increase by more than 100% by 2031, led by artificial intelligence, virtual and augmented reality, robotics and medical technology, all of which will likely have need an increase in demand. by more than 300 percent.