Britain’s economy is poised to extend its lead over France in the coming years, a report says today.
The Centre for Economics and Business Research tips UK output to be 10.2 per cent higher than that of France this year – despite both being on level pegging 15 years ago.
Britain’s lead will increase to 19.9 per cent in 2038, according to the consultancy’s report.
Germany will remain the biggest economy in Europe over this time, the CEBR said, although its lead over the UK is forecast to narrow slightly from 32.5 per cent this year to 28.8 per cent in 2038.
The forecasts throw doubt on claims that leaving the European Union has hampered Britain’s performance.
The UK’s output is set to be 10.2 per cent higher than that of France this year, having been level pegging 15 years ago (File Image)
Chancellor Jeremy Hunt has already announced cuts to National Insurance, which are due to come in next month
The UK economy has grown faster than that of any major European rival since 2010, outstripping fellow G7 members Germany, France and Italy in that time.
Since the 2016 Brexit referendum, Britain has been on a par with France but grown faster than Germany and Italy.
The International Monetary Fund expects Britain to grow faster than France and Italy in future years.
And Pushpin Singh, senior economist at the CEBR, said the lead over France is likely to grow in part due to the size of the French state and even higher levels of tax over the Channel than here. This divergence in growth trajectories is anticipated to persist in the foreseeable future, largely attributable to inherent structural disparities between the two economies,’ said Mr Singh.
‘One prominent distinction lies in the substantially larger role played by the French public sector within the domestic economy.
‘This distinction is underscored by discernibly different attitudes toward taxation, with France ranking second-highest among Organisation for Economic Co-operation and Development states in terms of tax-to-GDP ratio, registering at 45.1 per cent in 2021.
‘This stands in stark comparison to the UK’s ratio of 33.5 per cent, positioning it just below the OECD average. The pronounced influence of the expansive French state over recent decades has correlated with a comparatively less dynamic private sector and lower GDP growth rates in contrast to the UK.’
Mr Singh noted that the ‘cherished French model of social protection has been a contributing factor to suboptimal productivity growth’.
He added: ‘It is important to note that while productivity growth in the UK is not exceptional, it still marginally outpaces that of France.’
Although the outlook for growth in the UK and across much of Europe remains muted, the prospect of lower taxes and interest rate cuts in 2024 has raised hopes the British economy will pick up pace.
The UK economy has grown faster than that of any major European rival since 2010. Pictured: People walking in Le Village Royal in Paris
Chancellor Jeremy Hunt has already announced cuts to National Insurance, which are due to come in next month. And with inflation falling from a peak of 11.1 per cent in 2021 to 3.9 per cent now, the Bank of England is widely expected to cut interest rates next year, having raised them to a 15-year high of 5.25 per cent.
It is thought the first cut could come as soon as March and rates could fall as low as 3.75 per cent by the end of 2024.
The UK is the sixth largest economy in the world, behind the US, China, Germany, Japan, and India with France in seventh place and Italy in eighth. By 2038, the CEBR expects the UK to remain in sixth position and France to stay seventh. But Germany is set to drop to fifth and Italy to 12th.
By then, China will be the largest economy in the world, followed by the US in second, India in third and Japan in fourth.
UK EconomyEuropean UnionG7ItalyFrance