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UK economy 'could out-perform the rest of G7 by 2050'

By John Mulgrew

The UK could become the fastest growing economy out of the G7 nations by 2050, according to new research. According to PwC, the UK could boast average annual growth of 1.9%.

The UK's long-term economic growth could outpace EU countries like Germany, France and Italy, despite some medium-term drag from Brexit.

That's according to PwC's The World in 2050 report. However, globally, the UK is likely to be overtaken by other nations in terms of overall growth.

PwC predicts the UK will have fallen by just one place, from 9th to 10th in global economy rankings.

With potential average annual growth of around 1.9%, the UK is projected to remain the fastest growing economy in the G7 between 2016 and 2050. According to PwC, the UK position is "sustained by its projected larger working-age share of the population than in most other advanced economies".

But it has warned that the strong growth potential depends on the UK continuing to attract and employ talented people from around the world, following Brexit.

John Hawksworth, chief economist at PwC, said: "After a year of major political shocks, including the EU referendum and the election of President Trump, it might seem brave to offer economic prospects for 2017, let alone 2050.

"But a long-term view is crucial for planning for issues 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.

"Our relatively positive long-term growth projection for the UK reflects favourable demographic factors and a relatively flexible economy, even by European standards.

"However, developing successful trade and investment links with faster-growing emerging economies and recruiting workforce talent wherever in the world it can be found, are essential to achieving this growth and to offset probable weaker trade links with the EU after Brexit."

PwC also says that regardless of the outcome of the EU referendum, emerging economies are going to become dominant global economic forces, eclipsing many EU members.

China has already overtaken the USA to become the world's largest economy, and will move further ahead by 2050.

India currently sits in third place and is projected to overtake the US by 2050. PwC has also projected that the world economy will double in size by 2042, growing at an average annual rate of just over 2.5% between 2016 and 2050.

Mr John Hawksworth said: "Ageing populations and climate change require forward-thinking policies, which equip the workforce to continue to make societal contributions later on in life and promote sustainable development.

"Falling global trade growth, rising inequality and increasing global uncertainties are intensifying the need to create diversified economies that offer opportunities for everyone in a broad variety of industries. Emerging economies offer great opportunities for business and the forecasts in our report make it clear that failure to engage with these markets means missing out on the bulk of the economic growth we expect to see in the world economy between now and 2050."

Economies such as Brazil, China, India, Indonesia, Mexico, Russia and Turkey are forecast to grow at an annual average rate of 3.5% over the next 34 years, compared to an average of just 1.6% for the advanced G7 nations.

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