Britain has fallen behind India to become the sixth-largest economy in the world, adding to the tremendous shock to the cost of living that the London government is already experiencing.
The former British colony outperformed the UK to capture the fifth-largest economic rank in the final three months of 2021. The International Monetary Fund’s GDP data, which is based on US dollars, shows that India’s lead grew during the first quarter.
The next prime minister will inherit an unfavourable situation, including the UK’s decline in global rankings. Members of the Conservative Party will choose Boris Johnson’s successor on Monday. Rishi Sunak, a former Chancellor of the Exchequer, is expected to lose the election against former Foreign Secretary Liz Truss.
The winning candidate would lead a country that is experiencing its highest rate of inflation in four decades, as well as growing chances of a recession that the Bank of England predicts might persist until well into 2024.
In contrast, it is anticipated that the Indian economy will expand by more than 7% this year. Indian stocks have seen a global-beating recovery, moving their position in the MSCI Emerging Markets Index to the second spot, behind only China’s.
The size of the Indian economy in “nominal” cash terms for the quarter ending in March was $854.7 billion on an adjusted basis and using the dollar exchange rate on the last day of the relevant quarter. The UK was $816 billion based on the same scale.
The IMF database and historical exchange rates on the Bloomberg terminal were used to perform the computations.
The UK has probably declined even more since then. In the second quarter, the UK’s GDP expanded by only 1% in nominal terms and by 0.1% when inflation was taken into account. The pound has performed worse than the dollar relative to the rupee this year, with the pound losing 8% of its value.
India will surpass the UK this year in dollar terms, according to the IMF’s own projections, leaving the Asian giant in fourth place behind the US, China, Japan, and Germany. A decade ago, India was ranked 11th among the world’s top economies a decade ago, while the UK was placed fifth.