4 – The UK’s standing in the world
• By 2030, the UK is projected to remain the sixth largest economy in the world (at market exchange rates), falling behind India but moving ahead of France. • On a regional scale, we expect the UK to become the second largest EU economy before 2020, as it overtakes France, and to narrow the gap with Germany by 2030. •Our updated ESCAPE Index for 2013 shows that the UK ranks fifth in the G7 in 2013, down from 3rd in 2000 and 2007. This reflects the relatively deep recession suffered by the UK in 2008-9 and, prior to 2013, its relatively slow recovery. • The UK’s key strengths relative to other G7 countries are in the political institutions and communications technology fields. • In contrast, the UK consistently underperforms in the social progress and cohesion category. Improvement in this area requires longer term structural weaknesses in education and income inequality to be addressed.
As discussed in Section 2, the UK economy is on track to exceed its pre-recession peak (in real terms) in the second quarter of this year. This is a key milestone for the recovery, but what about the wider standing of the UK in the global economy? From a business perspective this is important when deciding where to locate key commercial activities (e.g. when moving production or sales activities to a new country or region). For policymakers a more holistic analysis of a country’s standing in the world could be useful as a starting point in identifying its progress over time and relative to other nations, and in assessing areas where there is room for improvement. The discussion in this article addresses these issues as follows: 4.1 Presents some global GDP league tables and assesses the standing of the UK relative to the G7 and E7 both now and prospectively in 2030; 4.2 Uses the PwC ESCAPE Index1 to m identify the broader strengths and weaknesses of the UK compared to the rest of the G7; and 4.3 Summarizes the key...
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