Brazil has overtaken the UK to become the world’s sixth-largest economy, according to a team of economists. The banking crash of 2008 and the subsequent recession has relegated the UK to seventh place in 2011, behind South America’s largest economy, which has boomed on the back of exports to China and the far east.
Russia and India are expected to benefit from a surge in growth over the next 10 years and push the UK into eighth place. Like most economies, India is struggling with high inflation and slowing growth, but its highly educated workforce and skills in growth areas from IT and services to engineering will push the economy into fifth place. After a decade of selling oil and gas to Europe and other parts of Asia, Russia will be at number four.
The only compensation for ministers concerned by Britain’s relative fall is that France will fall at a faster pace. Nicolas Sarkozy can still boast that France is the fifth-largest economy behind the US at number one, China, Japan and Germany, but by 2020, the Centre for Economics and business Research (CEBR) forecasts it will fall past the UK into ninth spot. Germany will also slip to seventh place in 2020.
CEBR chief executive Douglas McWilliams said: “Brazil has beaten the European countries at soccer for a long time, but beating them at economics is a new phenomenon. Our world economic league table shows how the economic map is changing, with Asian countries and commodity-producing economies climbing up the league while we in Europe fall back.”
Europe is expected to suffer a “lost decade” of low growth following a credit binge over the past 20 years. Paying back debts over a short timescale will restrict growth and prevent many countries, including the UK, from clawing back output lost in the banking crash for many years.
The European Union, recently described by one Chinese official as “a worn-out welfare society”, will remain the world’s largest collective trading bloc, though a recession next year is expected to hit global growth. The latest forecasts by the CEBR show world growth falling to 2.5 per cent in 2012, a downward revision from the forecast made in September.
However, the CEBR warned a scenario involving “one or more countries leaving the euro, sovereign defaults and banks going bust and needing to be bailed out” would reduce global growth in 2012 to 1.1 per cent. The European growth slowdown is forecast to be even more marked, with a fall in GDP by 0.6 per cent and a possible fall of 2 per cent if the euro currency club breaks up. The US forecast is better, with growth of 1.8 per cent. Emerging economies, which have seen their stock markets dive in recent months as investors assess the fallout from the euro crisis, would regain their momentum, said the CEBR.
China is forecast to grow by 7.6 per cent and India by 6per cent. But other recent star economies with closer links to the EU or commodity prices are likely to face an economic slowdown with Turkish growth slowing to 2.5 per cent from 7.1 per cent this year, Saudi Arabia at 4per cent after 6.1 per cent this year, Russia 2.8 per cent after 3.8 per cent this year, and Brazil 2.5 per cent after 2.8 per cent this year.
