The Brexit-hit pound will diminish the UK’s economic power and send it crashing down the table of the world’s largest economies to eighth place by 2030, new analysis has said.
France is on course to leapfrog the UK to become the fifth largest economy this year, according to a report by the Centre for Economics and Business Research (Cebr), as sterling’s post-Brexit vote slump takes its toll on UK economic growth.
However, Britain is expected to catch up with France in 2021 and overtake the European nation in 2026, but is not forecast to reclaim the heady heights of 2015.
Economists expect consumer spending - a key driver of the UK economic growth - to be squeezed next year as the currency fall causes inflation to shoot up.
The pound has dropped 18% against the US dollar and 10% versus the euro since Britain voted to leave the European Union.
Cebr president Douglas McWilliams said China remained on track to become the world’s largest economy, while India would reach number three by 2024.
“Korea overtakes both the UK and France before 2030, as will Brazil. Indonesia reaches the top ten and the Philippines the top twenty by then also,” he added.
The Cebr’s World League Table, covering 188 countries, places the UK as the seventh largest economy between 2017 and 2025, before slipping back in 2030 to eighth place.
The United States is expected to hold on to to its place as the world’s largest economy until China sweeps into the top spot in 2030.
World trade is expected to expand at a slower pace in the coming years as protectionist policies - driven at large by US President-elect Donald Trump - hold back growth, Cebr said.
However, the “flat white economy”, which combines the burgeoning creative and digital sectors, will continue to muster new growth avenues for nations such as the UK, Israel and Sweden.
Despite the Opec cartel’s landmark decision to support oil prices by slashing supply, the Russian economy is still expected to take a hit from the lower-for-longer cost of Brent crude.
Russia is expected to drop back to 14th place in the league table by 2030 after climbing to 12th place next year, the report said.
Britain’s economy is expected to grow by 0.4% in the fourth quarter, down from 0.5% in the previous three months, according to forecasts by the Bank of England.
The Bank predicted in November that inflation would jump close to 3% in 2017, while influential think tank the National Institute of Economic and Social Research has said it could hit almost 4% next year.
The Office for National Statistics revised up UK economic growth for the third quarter on Friday, with gross domestic product (GDP) expanding 0.6%, up from a previous estimate of 0.5%.