The UK’s place among the world’s top 10 economic heavyweights will be lost by 2050 as power shifts to countries including Nigeria and Mexico, a report signalled today.
PwC’s World In 2050 research shows that Indonesia could rise as high as fourth place if it can sustain growth-friendly policies. China will lead the rankings by some distance from India and United States but PwC expects a slowdown in Chinese growth after 2020.
The UK is currently in 10th position and should remain there until at least 2030 before slipping to 11th place in 2050 – behind Brazil, Mexico and Nigeria.
Despite this, the projected average UK growth rate of 2.4% to 2050 is stronger than other large Western European countries, reflecting ageing populations and slowing productivity growth in places such as Germany and Spain.
The EU’s overall share of world GDP is projected to decline from around 17% to less than 12% by 2050. The UK’s share is projected to fall from 2.3% in 2014 to around 1.8% in 2050 as its growth rate lags behind those of the emerging markets.
PwC’s chief economist John Hawksworth said: ” Europe needs to up its game if it’s not to be left behind by this historic shift of global economic power, which is moving us back to the kind of Asian-led world economy last seen before the Industrial Revolution.
“The US may hold up better, provided it can remain at the global technological frontier, and the UK could also perform well by G7 standards if it remains open to trade, investment, people and ideas.”
Japanese growth is projected to be the slowest of all major countries, driven in part by a steadily declining population. It is projected to fall from fourth to seventh place in the global GDP rankings over the period to 2050.
Nigeria, Vietnam and the Philippines have high projected average growth rates of around 4.5-5.5% per year until 2050. Malaysia is also projected to grow at around 4%, which is higher than China’s projected average growth rate of around 3.5%.
PwC measures the relative size of economies using purchasing power parity rates as it believes this is a better indicator of average living standards.