UK to tum­ble down eco­nomic league ta­ble in 2019

Fore­casts from PwC make for mixed read­ing on the global out­look

Shares - - BIG NEWS - By Tom Sieber Deputy Ed­i­tor

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

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