Friday 20 October 2017

UK to overtake Germany as Europe's biggest economy

British Prime Minister David Cameron, right, and Chancellor George Osborne
British Prime Minister David Cameron, right, and Chancellor George Osborne

Szu Ping Chan

Britain will overtake France as the world's fifth largest economy within five years, and is on course to leapfrog Germany to become the largest economy in Europe by 2030, according to a leading think-tank.

Its younger workforce and position outside the eurozone mean it is less exposed than its European neighbours to the problems of the 17-nation bloc, says The Centre for Economics and Business Research (CEBR).

"Positive demographics with continuing immigration, rather less exposure to the problems of the eurozone... combine with relatively low taxes, to encourage faster growth than in most western economies," the CEBR said in its annual Economic League Table report.

Douglas McWilliams, the CEBR's chief executive, said Britain could become even stronger outside the European Union, even though an exit would be "very painful" in the short term.

"My instinct is that in the short term, the impact of leaving the EU would undoubtedly be negative," he said.

"My suspicion is that over a 15-year period, it would probably be positive."

Prime Minister David Cameron has pledged to hold a referendum on EU membership if the Conservative Party wins the 2015 election.

OVERTAKE

The CEBR predicts the UK will move up one place to overtake France as the world's fifth-largest economy by 2018.

It also believes the gap between the size of Britain and Germany's economies will narrow to $300bn in five years, from a gap of almost almost $1 trillion in 2013.

Germany retains fourth spot this year, while Britain remains in sixth place.

Germany's ageing population will put it behind countries with younger populations, the CEBR said. However, Germany's fate depended on whether it remained in the euro, and the CEBR said the country would benefit from a break-up of the single currency. "If the euro were to break up, Germany's outlook would be much better," the report said.

"A Deutschemark-based Germany certainly would not be overtaken by the UK for many years, if ever." The CEBR added that Italy and Spain would slip significantly down the rankings by 2028.

France, meanwhile, will slip to eighth place by 2018, and 13th by 2028. The CEBR said France's bloated public sector and 75pc higher tax rate meant it would be "one of the worst performing of the Western economies".

"France is going to prove one of Europe's most complicated and most endemic economic problems, and will probably be the biggest single impairment to making the eurozone work," Mr McWilliams said. (© Daily Telegraph, London)

Irish Independent

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