UK to tumble down economic league table in 2019
Forecasts from PwC make for mixed reading on the global outlook
According to a report from consultant PwC the UK could fall from fifth to seventh in the global rankings of economies by size in 2019 but it is still expected to generate a better longterm growth rate than the Eurozone.
The Global Economy Watch report expects both France and India to overtake the UK next year. While the UK and France often swap places the emergence of India and its ascent up the rankings is expected to be more permanent according to PwC.
Mike Jakeman, senior economist at PwC, says: ‘India is the fastest growing large economy in the world, with an enormous population, favourable demographics and high catch-up potential due to low initial GDP per head. It is all but certain to continue to rise in the global GDP league table in the coming decades.’
Slowing growth is anticipated in the US and China and tighter labour markets are anticipated for advanced economies. This is a particular area of concern for UK businesses in a post-Brexit world.
In total around 40 countries will see their working age populations shrink with ‘the global nexus of the declining labour force’ remaining Eastern Europe.
Trade wars are expected to persist and the risk of an escalation from the US/China tensions to a ‘wider trade conflict’ is flagged.
Strikingly there is greater optimism on UK growth than with the Eurozone. Between 2021 and 2025 real average GDP growth (i.e. taking into account inflation) of 1.8% is forecast for the UK, compared with 1.5% for the Eurozone.
According to PwC the US will mark its longestever business cycle expansion in July 2019, when the period of growth that began in mid-2009 surpasses the length of the expansion that ran from 1991 until 2001. But it believes this could come to an end in 2020 or 2021.
Source: PwC analysis, National statistical authorities, Datastream, IMF