[ 2014-12-27 ]

Britain edges past France on world stage
Britain has overtaken France to become the world's
fifth largest economy, new analysis shows.

A shake-up of the national accounts this summer,
which showed the UK's downturn during the Great
Recession was shorter and shallower than
previously thought, helped Britain overtake the
Gallic economy by a whisker this year.

The Centre for Economics and Business Research
(CEBR) said Britain's acceleration was also
boosted by the inclusion of sex and drugs to UK
growth. While the addition of prostitution and
illegal drugs form part of new pan-European
accounting standards, France has refused to comply
with EU rules because it does not consider them to
be "voluntary commercial activities".

Eric Dubois, a director at INSEE, France's
statistics office, has described drug use as a
"dependency" that does not involve "free will". He
said prostitution was the result of "Mafia
networks and trafficking illegal immigrants".

Official estimates show prostitution added about
£5.7bn to the UK economy in 2013, while illegal
drugs were worth about £6.62bn.

This helped the UK to overtake France by the
narrowest of margins, the CEBR's analysis showed.
UK gross domestic product (GDP) is expected to
total $2.828 trillion (£1.816 trillion) this
year, compared with French GDP of $2.827
trillion.

The CEBR expects Britain to pull further ahead of
France in the coming years. This is despite
concerns about the sustainability of the UK
recovery raised after further data revisions this
week showed growth in five out of the previous six
quarters was weaker than thought.
Nominal UK GDP is expected to grow to $2.95
trillion in 2019, compared with $2.67 trillion in
France.

The French economy has barely grown this year,
while the eurozone is at risk of slipping into a
deflationary spiral that economists have said may
lead to a Japanese-style "lost decade".

Britain is also still on course to leapfrog
Germany to become Europe's top economy by 2030,
helped by its younger workforce and position
outside the eurozone.

China is expected to overtake the US as the
world's largest economy in 2025. The country added
almost £200bn to the size of its economy with the
stroke of a pen this month, after revising its
accounts to take into account new census data.

Despite recent jitters in emerging markets, the
CEBR said China, India and Brazil would continue
to catch up with the developed world.

It described India's rise and young workforce as
"unstoppable". The country is expected to overtake
the UK in 2018, and Japan in 2025 to become the
world's third largest economy. "The figures show
the dramatic changes taking place in the world's
economic geography," said Douglas McWilliams,
chief executive of the CEBR.

The figures also showed the impact of the economic
crisis in Russia, which slipped two places in the
2014 league table to tenth, back below India and
Italy.

Source - The Telegraph

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