The United Kingdom is on track to overtake Japan and become the world’s fifth-largest economy by the end of the next decade, according to new long-term forecasts that point to a gradual rebalancing of global economic power.
Annual projections from the Centre for Economics and Business Research (CEBR) estimate that the UK’s gross domestic product will rise from just under $4 trillion in 2025 to about $6.8 trillion by 2040. That growth would return Britain to the world’s top five economies, a position it is expected to consolidate as weaker growth prospects in France and Germany limit their ability to catch up.
The United States and China are forecast to remain the world’s two largest economies, with China continuing to narrow the gap. By 2040, China’s GDP is projected to reach just under $48 trillion, compared with around $53 trillion for the US at current dollar prices. When measured using purchasing power parity, which adjusts for living costs and currency differences, China has already overtaken the US earlier this decade.
The think tank said China is also expected to surpass the United States in GDP measured at current prices by 2045, earlier than previously anticipated. That shift reflects weaker growth prospects in the US economy as it contends with the impact of tariffs, trade protectionism and longer-term structural challenges.
India is projected to be one of the biggest winners of the coming decades. The CEBR forecasts it will become the world’s third-largest economy by 2040, rising from ninth place in 2010 and overtaking the UK, Japan and Germany. Over the longer term, India is expected to continue its ascent and could become the world’s largest economy by the end of the century.
Germany, which has been mired in a shallow recession for the past two years, is expected to remain the fourth-largest economy, while Japan is projected to fall to sixth place when GDP is measured at current prices. Indonesia, buoyed by its large and growing population, is forecast to surge from 17th place into the world’s top ten economies by the early 2030s.
Nina Skero, chief executive of the CEBR, said the global economy is undergoing a period of “gradual rebalancing,” with economic influence shifting away from heavily indebted Western nations toward younger, faster-growing economies in Asia and the Global South. She said rising investment and demographic advantages in those regions are reshaping the global economic order.
Despite the UK’s expected rise in overall economic size, the outlook for living standards is less optimistic. The CEBR projects that Britain’s ranking in GDP per capita will slip from 19th in the world this year to 21st by 2040. While average GDP per head is forecast to rise from just under $57,000 to about $89,000, it will be outpaced by several advanced economies, including Luxembourg, Ireland, Switzerland, Singapore and the United States.
Globally, the CEBR expects economic growth to slow to about 2.5% next year, weighed down by the highest US tariff rates in a century and heightened uncertainty in global trade. The think tank warned that persistent challenges such as high public debt, above-target inflation, ageing populations and geopolitical tensions will continue to strain many economies, even as long-term shifts in economic power gather momentum.
