According to a report published in Forbes magazine, India has overtaken United Kingdom in terms of the size of the economy, first time in 150 years.
- With this major shift in world economy, India has now become the fifth largest country in terms of the size of the economy after the United States, China, Japan and Germany.
- The recent shift took place because of India’s continuous economic growth in the last 25 years as well as Britain’s recent economic issues after the Brexit decision over the last 12 months.
Findings of the Report
According to the Forbes report, India was expected to overtake UK GDP in 2020, but the almost 20% drop in the value of the pound in the last one year made it possible in 2017.
- Economic think-tank Centre for Economics and Business Research (CEBR) in December 2011, forecasted that India would become the “fifth largest by 2020”.
- UK’s 2016 GDP of GBP 1.87 trillion converts to $2.29 trillion at exchange rate of GBP 0.81 per $1, whereas India’s GDP of INR 153 trillion converts to $2.30 trillion at exchange rate of INR 66.6 per $1.
- The gap in economic growth is likely to widen as Indian economy is growing at 6-8% per year whereas UK’s economic growth is expected at 1-2% per year until 2020.
- Even if the currencies fluctuate that modify these figures to rough equality, the verdict is clear that India’s economy has surpassed that of the UK based on future growth prospects.
Britains Brexit Decision
Brexit is a word that has become used as a shorthand way of saying the UK leaving the EU merging the words Britain and exit to get Brexit.
- A referendum – a vote in which everyone (or nearly everyone) of voting age can take part – was held on 23 June, 2016, to decide whether the UK should leave or remain in the European Union. Leave won by 52% to 48%.
- The referendum turnout was 71.8%, with more than 30 million people voting. Britain has got a new Prime Minister – Theresa May. Former Prime Minister David Cameron resigned on the day after losing the referendum.
- The pound fell dramatically after the Brexit vote at the end of June. On 15 December the pound was worth $1.25 – compared with $1.51 a year earlier.The economy grew by 0.5% in the three months after the Brexit vote, powered by the UK’s services sector.
- This was slower than the 0.7% rate in the previous quarter, but stronger than analysts’ estimates of about 0.3%.
- The Bank of England has raised its forecast for economic growth next year to 1.4% from 0.8%, but cut expectations for 2018 to 1.5% from 1.8%.
Forbes is an American business magazine published bi-weekly. It features original articles on finance, industry, investing, and marketing topics.
- Forbes also reports on related subjects such as technology, communications, science, and law. Primary competitors in the national business magazine category include Fortune and Bloomberg Business week.
- Its headquarters is located in Jersey City, New Jersey.