Britain is on track to overtake France and Germany to become the biggest economy in Europe, according to an authoritative global forecast.
A rapidly growing population, relatively low taxes and independence from the ailing Eurozone will make Britain the most successful economy in the West after the United States over the next fifteen years, according to the Centre for Economic and Business Research.
In an upbeat assessment of the country’s prospects, the CEBR said Britain, the sixth biggest economy in the world, will see its GDP grow from £1.59 trillion to £2.64 trillion by 2028.
In the same period, Germany’s output will grow more slowly from £2.2 trillion to £2.69 trillion, with growth hampered by a weak euro, an ageing population and the prospect of future Eurozone bailouts. It puts Britain on course to surpass Germany by 2030.
Britain is also due to overtake France by 2018. Its global ranking is set to slide as Francois Hollande’s high tax regime and weak exports suffocate growth.
The Treasury hailed the report as evidence that George Osborne’s plan to reduce the public deficit and cut corporation taxes is working.
But critics will point out that the major threats to an otherwise rosy outlook – cutting immigration and destabilising Britain’s relationship with the European Union – are the Government’s flagship policies.
David Cameron has promised to cut immigration to the “tens of thousands” and to repatriate powers from Brussels to Westminster ahead of a referendum on Britain’s membership of the EU in 2017.
The CEBR highlighted a failure to win new export markets as a threat to growth, and Britain’s balance of payments has deteriorated in recent months, with much new growth coming from consumer spending rather than trade.
A break-up of the UK following the Scottish referendum would hurt the economy, the think tank warned.
“The UK is forecast to be the second most successful of the Western economies after the US. Positive demographics with continuing immigration, rather less exposure to the problems of the Eurozone than other European economies combine with relatively low taxes by European standards to encourage faster growth than in most Western economies,” the CEBR said. “By 2029 the UK will almost have caught up with Germany and we still forecast that the UK will overtake Germany to be the largest Western European economy around 2030.”
The research forecasts a new economic world order, with emerging economies eclipsing the struggling Eurozone.
China is on course to overtake the United States as the world’s biggest economy within 15 years, while India is set to surpass Japan as the world’s third biggest economy and Turkey is due to overtake France.
Other nations on the march include Mexico, due to rise to ninth place, and Korea, rising to 11th.
And providing they can remain politically stable, Nigeria, Iraq, Egypt and the Philippines could enter the top thirty.
Meanwhile, Italy will drop from eighth place to 15th and Spain from 13th to 18th.
Germany would perform much better, and may never be surpassed by Britain, were the eurozone to break-up and it were to return to the deutschmark, the CEBR noted.
Other losers include South Africa, which is due to drop out the top thirty because of strikes and a weak currency; Iran, which faces years of sanctions; and Russia, which is due to reach eighth place but whose potential growth is going to be hampered by falling energy prices.
While the rest of Latin America booms, Argentina is set to pay the price of economic mismanagement for years to come and may fall behind Colombia.
The Treasury said the forecast was “encouraging” but more needed to be done.
“Britain’s hard work is paying off and the long term economic plan is working. The economy is growing, the deficit is falling and jobs are being created and while this report is encouraging, the job is not yet done,” a spokesman said.
A separate study released earlier this week by the National Institute of Economic and Social Research claimed Britain’s economy could be 11 per cent smaller, and individual wages lower, by 2060 if net migration were halved from its current trend level of 200,000 a year.
New world order: top ten nations by GDP (CEBR World Economic League Table)
Top 10 countries, 2013
1 United States
6 United Kingdom
Top 10 countries, 2028
2 United States
7 United Kingdom