UK ‘will lead Europe’s top economies in 2016 growth’

The UK is set to become the best-performing economy in western Europe next year and is likely to overtake powerhouse nations Germany and Japan as a global economic leader in the 2030s, according to a report today.

George Osbornes plan to reduce the deficit is working, the Centre for Economics and Business Research found. Picture: Getty Images
George Osbornes plan to reduce the deficit is working, the Centre for Economics and Business Research found. Picture: Getty Images

Britain will rise up the world rankings thanks to the strength of its IT and software industries as well as its culturally diverse workforce, the World Economic League Table from the Centre for Economics and Business Research (Cebr) found.

The UK is the fifth largest economy in the world, with a gross domestic product (GDP) worth $3 trillion (£2 trillion) this year, behind Germany at $3.3tn, and Japan in third spot at $4.1tn.

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However, the report suggested that the prospect of a “Brexit” in the In-Out referendum on Europe pledged by Prime Minister David Cameron before the end of 2017 could place the UK’s position as a world economic leader in jeopardy.

The think-tank warned that the UK’s referendum on its continuing membership of the European Union (EU) may lead to a more insular culture, which would also make Britain’s economy more isolated and grow at a slower pace than its competitor nations.

It suggested that uncertainty over the UK’s membership of the EU could harm investment, as overseas firms hold off their plans until after the result of the referendum is known.

Meanwhile, Cebra said that the United States remains the richest country in the world with a GDP worth $18tn, followed by China at $11.4tn.

In another key finding, the survey added that the possibility of Scotland, or even Northern Ireland, leaving the Union would hurt the UK’s economic growth.

However, during the 2030s the report said the UK is itself due to be overtaken by developing nation Brazil, currently worth $1.8tn.

The Cebr report also points out a number of risks to the UK economy in key areas such as exports and the dependence of the rest of the nation on wealth concentrated in ­London .

It said: “Its weakness is its bad export position and unbalanced economy, with many parts of the country heavily dependent on subsidies from the relatively high taxes levied on Londoners.”

A UK government spokesman said the overall findings proved the economic plan pursued by Prime Minister David Cameron and chancellor George Osborne of deficit reduction was working.

The spokesman said: “The government’s long-term plan has laid the foundations for a stronger economy.

“The UK is now set to be the best performing economy in western Europe and it could overtake Japan in the 2030s and then Germany.

“With the deficit reduced by almost two-thirds as a share of GDP since its peak in 2009-10, an average of 1,000 extra people in work each day and employment rates at a record high, the government’s plan for a more prosperous future is delivering for working people.”

The warning about harm to Britain’s economy caused by EU withdrawal came as leading economists said that the two biggest risks facing Britain’s economy next year are “Brexit and Brexit”.

A total of 43 per cent of economists surveyed by Bloomberg News said a British departure from the EU is the biggest threat, while 13 per cent picked the buildup to the referendum on membership of the bloc – 39 per cent of respondents picked these as their second-biggest risks.

Slower Chinese economic growth and a weaker currency led the Cebr to push back last year’s forecast of when the Asian nation will overtake the US to become the world’s richest country by four years to 2029.

It adds that sixth place France, with a GDP of $2.4tn, and Italy, with an economy worth $1.8tn in eighth spot, are in danger of losing their seats at the top table of the world’s richest nations.

The Cebr said these countries are in danger of exclusion from bodies such as the G8 group of richest nations and perhaps eventually the G20 if their economies persistently under-perform.