The British economy is expected to close its GDP gap with Germany by 2038

(Bloomberg) — The United Kingdom will become the best-performing major economy in Europe over the next 15 years, narrowing the gap with Germany and widening its lead over France, according to new long-term forecasts.

The Center for Economics and Business Research expects the UK's GDP to grow by 1.6% to 1.8% between now and 2038, helping the country maintain its position as the world's sixth-largest economy.

The forecasts published on Tuesday predicted the UK would emerge from years of economic stagnation caused by Brexit and a series of shocks including the pandemic and rising inflation.

The UK economy has been battered by weak productivity growth since the start of the financial crisis, as well as labor supply problems in recent years. This has led the Bank of England to become more pessimistic about the UK's growth prospects in the coming years.

According to CEBR's long-term global economic rankings, the UK is expected to grow faster than all of the eurozone's “big four” economies – France, Germany, Italy and Spain – but not as fast as the US.

“The fundamentals of the UK economy remain very strong,” said Pushbeen Singh, chief economist at CEBR. “London’s continued position as a hub for financial and advisory services, coupled with the broad strength of the services sector across the UK, will drive growth in the UK.”

He said the economic impact of Brexit was “exaggerated or not yet adequately researched.”

The economic consulting firm expects China to overtake the United States as the world's largest economy by 2037 and to double global GDP as developing countries catch up with their developed counterparts.

By 2038, Italy will fall out of the ten largest economies in the world and will be replaced by South Korea. The United States and Germany will fall in the rankings, while India and Brazil – the two most populous developing countries – will move into the top ten.

According to Singh, France will underperform the UK, especially due to its large public sector and high tax rates, while a slowdown in manufacturing in Germany could help the UK close the gap.

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