UK economy forecast to narrow GDP gap with Germany by 2038

UK economy forecast to narrow GDP gap with Germany by 2038

The UK will be Europe’s best-performing major economy in the next 15 years, narrowing the gap with Germany and extending its lead over France, according to new long-run forecasts.

The Centre for Economics and Business Research predicted that GDP growth in the UK will settle between 1.6% and 1.8% in the period up until 2038, helping it retain its position as the world’s sixth-largest economy.

The forecasts published Tuesday predict that the UK will shake off an economic malaise lasting years that has been defined by Brexit and a string of shocks, including the pandemic and surging inflation.

Britain’s economy has been hampered by anemic productivity growth since the financial crisis with labor supply problems also emerging in recent years. It has led to the Bank of England to take a more pessimistic view on the UK’s growth prospects in the coming years.

Under CEBR’s long-run world economic rankings, the UK is expected to grow faster than all of the eurozone “big four” economies — France, Germany, Italy and Spain — but not as rapidly as the US.

“The fundamentals of the UK economy are still very much strong,” said Pushpin Singh, senior economist at CEBR. “London’s status as a financial and advisory services hub enduring, along with the wider strength of the services sector across the UK, will push UK growth.”

He said the economic impacts of Britain leaving the European Union have “either been exaggerated or have not been explored enough yet.”