Daily Management Review

UK economy will cede to India and France in 2019


In 2019, the UK will give up the fifth line in the ranking of the most developed economies to India and France.

The British economy and currency have been shaking throughout all this year. The United Kingdom was in a fever from Brexit, a very extraordinary event, the consequences of which will be felt for a long time, not only by Britain, but by the whole of Europe.
The Financial Times reports that in the coming year, the UK will drop from fifth to seventh place in the rating of the most developed economies of the world, compiled by the IMF. London will cede the fifth line to India. In addition, France will also overtake its English neighbor. Such is the price of Brexit, the exit of Great Britain from the European Union, which is scheduled for March 29, 2019. However, the utter chaos that prevails around Brexit after the turbulent events of recent weeks generally casts doubt on Britain’s exit from the EU. Every day, the voices of supporters of the second referendum on the membership of London in the European Union are sounding louder.
Great Britain will leave (or not) the European Union, but consequences of the rush and confusion have already affected the British economy, which was second only to the United States, China, Japan and Germany at the beginning of this year in the dollar equivalent GDP ranking.
The IMF forecast has become another trump card for Brexit opponents, whose numbers are growing every day. The government, led by Teresa May, argues that it will be easier for the United Kingdom to remain the leading player on the world stage after leaving united Europe. However, the numbers say the opposite. Moreover, it should be borne in mind that the loss of two places happened just before Brexit, not after it. If Britain nevertheless leaves the EU, then we can safely predict more serious problems and losses for its economy.
PwC economist Mike Jakeman, whose forecast for 2019 coincides with the IMF forecast, explains that the Indian economy now has the highest rates of development among the major economies of the world and, apparently, is not going to slow down for now. In addition to rapid growth, advantages of the Indian economy include a huge population, a favorable demographic environment, as well as high potential to catch up and overtake the more developed economies.
As for France, there are a number of characteristics traits of this country: population size and level of development, for example, are similar and often change places in all sorts of economic ratings. The results of the French economy in 2019 will largely depend on the euro against the pound sterling. Much of the concession to the UK position is explained by the sharp decline in the pound against the euro after the 2016 referendum.
Opponents of Brexit accuse May’s government of having lost the ability to influence international events in the past two years. Joe Johnson, who until November headed the kingdom’s ministry of transport, speaks of government “failures”, which, in his opinion, are comparable to the Suez crisis of 1956, one of the most serious in the history of the country, which finally consolidated the collapse of the British colonial empire. Former Prime Minister John Major warns that, after Brexit, Great Britain will all be treated as "an average state in all respects."
By the way, calculations of GDP at the exchange rate used by the IMF do not accurately reflect the general state of the economy. In this regard, they often use a different method of calculation - according to their purchasing power. So, by purchasing power, i.e. the volume of goods and services that can be bought in a particular country, the Indian economy is already superior to the UK. Moreover, more than two times! On the other hand, per capita income, i.e. the result of dividing GDP in monetary terms by population, in India, of course, is much lower than in Britain. According to this indicator, the United Kingdom in 2019 will give way to France and will remain behind it at least until 2023.

source: ft.com