0144 GMT January 23, 2020
A fall in the value of the pound, combined with slower growth this year and next as Brexit takes its toll, will mean the UK drops from fifth in the GDP rankings to sit just above Italy in eighth place and Brazil in ninth, theguardian.com wrote.
The firm said its annual analysis of global trends showed that India’s elevation to fifth place was likely to be permanent as the country of 1.3 billion people maintains a growth rate of 7.6% over the next five to six years.
France will benefit in the short term from the rising value of the euro against the pound. However, it is expected to fall behind the UK again in subsequent years as its GDP growth begins to wane.
Mike Jakeman, a senior economist at PwC, said: “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.
“The UK and France have regularly alternated in having the larger economy, but subdued growth in the UK in 2018 and again in 2019 is likely to tip the balance in France’s favour. The relative strength of the euro against the pound is an important factor here.”
PwC has forecast Britain’s economy to grow by 1.6% next year and 1.7% in 2020 before rising to 1.8% in the five years to 2025 as the uncertainty surrounding Brexit recedes.
The Global Economy Watch report predicts France will grow by 1.7% next year and 1.6% in 2020 before falling back to 1.5% in the years to 2025.
Germany, Italy and Spain will suffer a long-term slowdown in GDP growth along with the three largest economies – the US, China and Japan – which the report said was largely in response to their ageing populations.
Jakeman said the boost from Donald Trump’s fiscal stimulus was expected to fade in the US, while higher interest rates introduced by the Federal Reserve were likely to dampen consumer spending.
PwC, which said a strong dollar would also continue to drag on the US balance of trade, forecast that its growth would moderate from an estimated 2.8% in 2018 to around 2.3% in 2019.
China, which has struggled to control spiralling corporate and consumer borrowing, is likely to experience “a modest deceleration in growth” during 2019 to 6.3%, and 6.2% in 2020, before a further fall to an average 5.9% in subsequent years to 2025.
Barret Kupelian, co-author of the report, said: “Last year, the big economic news was centred around advanced economies creating around 4.5m jobs.
“We expect this trend to gradually moderate in 2019, with some economies such as the US, Canada and Germany hitting structural floors in their unemployment rates, and wage growth starting to gradually pick up.
“Assuming an orderly Brexit, we expect the UK to also see unemployment flattening off, though a disorderly Brexit could lead to a marked rise of unemployment.”