I am rather taken aback by William Hague’s claim, reported by Iain Dale, that the UK is forecast to be only the world’s 11th largest economy by 2015. Given that Britain currently ranks 6th in PPP and nominal terms, that’s quite a drop. Russia is currently 11th in nominal terms – its economy is 40% smaller than the UK’s.
Now I am very bearish about the British economy, but I also expect many other countries to face rocky times over the next decade. Not only does Hague make me look like a wide-eyed optimist, he obviously expects the UK to be alone in its economic troubles. He even mentions Italy as one of the countries he believes will prosper as the UK suffers – which strikes me as a real stretch (assuming he isn’t factoring in the Euro as a shield for the Italian economy).
Anyone know what source Hague is using for his forecast? (And just to hedge a little – it’s possible that Dale misquoted him.) You can read the full speech here.
Update: The source appears to be this analysis from the Centre for Economics and Business Research Ltd, which argued in a December 2009 press release:
In 2005, the UK was the 4th largest economy in the world. China overtook in 2006, France in 2008 and Italy in 2009. So now the official figures suggest that we have dropped to No7 (although I still have some doubt about the Italian figures that are incorporated into this analysis).
Projecting forward, the combination of economic growth and population growth, plus a likely rising real exchange rate mean that Brazil and Russia will overtake us sometime soon, perhaps in 2012. India will almost certainly overtake as well, though probably not till 2015.
But it also looks as though Canada could, if demand for natural resources continues to rise strongly, catch up and surpass UK GDP around 2015 as well. Even Australia is likely to have overtaken by 2020.
Not sure which ‘official figures’ CEBR is using though…
