Britain will be the fastest growing economy in the G7 over the next three decades as a result of our economic re-alignment in leaving the EU trade bloc. That’s according to the predictions of a new study released by PwC.
The short-term impact will be little more than a bump in the road, with UK economic predictions forecasting that Britain will outpace the US, Canada, France and Germany between 2016 and 2050. PricewaterhouseCoopers commented that our new-found opportunities to forge new trade relationships with the “faster-growing emerging economies” will lead to new prospects for growth, as these economies, such as India, Brazil and Russia are set to cement their status as global trading fortresses over the next decade or two.
John Hawksworth, who is chief economist at PwC, commented that their “relatively positive long-term growth projection for the UK is due to favourable demographic factors and a relatively flexible economy by European standards”, which gave Britain a distinct advantage, however noted that “developing successful trade and investment links with faster-growing emerging economies will be critical to achieving this”. Referring to our relatively large working-age population, Hawksworth also said that our “favourable demographic factors” were likely to continue.
In terms of the G7 club of major advanced economies, Britain is set to end up on top, even though it slips a place to 10th between now and 2050 in the global league table based on purchasing power parity (PPP). The PPP measure adjusts for price differences and purchasing power in each country. According to this measure, Germany is set to drop from 5th to 9th and Italy from 12th to 21st.
The global outlook in terms of economic growth is set at around 2.6% over the next three decades, however among the major advanced economies are expected to have a growth rate that is “markedly slower”, according to PwC, at an average of 1.6%. Due to its flexible economy and new trade-relationships, growth in Britain is predicted to average 1.9%.
Hawksworth commented that
“After a year of major political shocks with the Brexit vote and the election of President Trump, it might seem brave to opine on economic prospects for 2017, let alone 2050…”
“…but a long-term view is crucial for considering areas like pensions, healthcare, energy and climate change, housing, transport and other infrastructure investment. By looking beyond unpredictable short-term economic and political cycles and focusing on fundamentals, long-term growth projections can actually be more reliable than short-term forecasts.”
Prior to the EU referendum, PwC and a majority of expert economists gave predictions that we would experience a significant negative economic impact resulting from our departure from the EU. While these predictions have since been revised, this study from PwC is one of the only studies, before or after the referendum, which has given any serious thought to the long-term consequences of Brexit for the economy.
It seems that our departure is likely to result in an economic environment which is more conducive to economic growth, international free-trade and prosperity than most of the per-referendum forecasts would have had you believe.