Britons are set to be poorer than Turks and Latvians by the 2040s, according to new research that highlights the UK’s declining position in global economic rankings. Recent modelling by the Centre for Economics and Business Research (Cebr) forecasts that the UK will plummet to the 46th position in GDP per capita rankings by 2050. This analysis marks a significant decline from the UK’s historical standing as the 25th richest country between 1998 and 2003.
Overview of the Findings
The Cebr study predicts that by 2030, Lithuania will surpass the UK in GDP per capita, followed shortly by the Czech Republic and Saudi Arabia in 2031. The trend continues as Poland is expected to overtake the UK’s GDP per capita by 2034. By 2043, both Turkey and Latvia will have a higher GDP per capita than the UK, while Panama and Slovakia are forecasted to enjoy superior living standards by 2050.
The 2024 rankings show the UK as the 30th richest economy, indicating a troubling trajectory as the gap between the average Brit and other nations widens over the next 25 years. The Cebr’s report is included in the forthcoming book Prosperity Through Growth, authored by an array of economists including Dr. Arthur Laffer, who has significantly influenced economic policy discussions.
Economic Context
The forecasts are particularly alarming given the UK’s solid history of economic performance. The UK has enjoyed a relatively high GDP per capita but is now facing challenges that threaten its standing. Factors contributing to this downturn include political instability, sluggish productivity, high household debt, and stagnating investments, which compound the overall economic struggles depicted by the Cebr’s projections.
Turkey, currently designated as the poorest country anticipated to surpass the UK, has a GDP per capita of approximately $35,631—significantly lower than the UK’s current $54,475. It’s crucial to note that the Cebr anticipates only Canada and France will fall below the UK, dropping to 54th and 49th positions, respectively, due to their own pressing economic woes.
Policy Recommendations
In light of these concerning projections, the authors of Prosperity Through Growth propose a robust set of policies aimed at revitalizing the UK’s economy. Among these are plans to merge National Insurance with income taxes, reduce business regulations, and adopt a ‘smart Net Zero’ approach to lower energy costs. These measures, if applied effectively, could potentially elevate the UK’s GDP per capita from a projected $74,832 to $96,383 by 2050, substantially improving the country’s global standing.
The book presents alternative recommendations designed to enhance economic growth by 7% within five years and nearly 30% over 20 years. Such improvements would elevate the UK’s position in the global GDP per capita rankings from 46th to 19th, showcasing the potential for positive economic reform through strategic policy change.
Expert Opinions
Former Prime Minister David Cameron voices concerns regarding the UK’s economic climate, describing it as a "situation of genteel decline." He calls for the government to present a clear action plan to mitigate perceptions of the UK’s economic stagnation. Similarly, Gus O’Donnell, former cabinet secretary, emphasizes the importance of the research, highlighting its significance in addressing the UK’s economic future.
Conclusion
As the Cebr’s projections paint a sobering picture of the UK’s economic future, they serve as a wake-up call for policymakers. The forecasted decline underscores the pressing need for effective economic strategies to elevate living standards and improve the country’s global economic standing. If the proposed reforms gain traction, there remains hope that Britain can reclaim its position as a leading economy, rather than descending into a state of relative poverty compared to its peers. The coming years will be critical for determining the economic trajectory of the UK, as it must navigate both domestic challenges and global competition.
