Britain has lost ground to India to become the sixth-largest economy in the world as the London government struggles to adapt to a severe cost-of-living shock. India outperformed the UK in the last three months of 2021 to overtake it as the world’s fifth-largest economy. According to IMF GDP data, India widened its lead in the first quarter of the calculation, which is based on US dollars.

The United Kingdom’s decline in global rankings is an unwelcome backdrop for the next prime leader. The Conservative Party will choose Boris Johnson’s successor on Monday. In the last round of voting, it is anticipated that Foreign Secretary Liz Truss would overcome former Chancellor of the Exchequer Rishi Sunak. The successful candidate will govern a nation with the highest inflation rate in four decades and increasing odds of a recession that the Bank of England forecasts might last well into 2024.

On the other hand, it is projected that the Indian economy will grow by more than 7% this year. Indian stocks recently saw a comeback that outpaced the rest of the world, bringing them into second place in the MSCI Emerging Markets Index, just behind China. An adjusted measure of the Indian economy from January through March was $854.7 billion using the dollar exchange rate on the last day of the relevant quarter. On the same basis, the UK was $816 billion.

IMF Details

The IMF database and historical exchange rates were used in the calculations, which were done using the Bloomberg terminal. The UK has probably degraded considerably more since then. The UK’s GDP expanded by just 0.1% after accounting for inflation and 1% in nominal terms during the second quarter. The Sterling has underperformed the dollar in relation to the rupee this year, losing 8% of its value versus it.

India will eclipse the UK this year in dollar terms, according to the IMF’s own predictions, putting the Asian powerhouse only behind the US, China, Japan, and Germany. Ten years ago, the UK had the fifth-largest economy, while India had the eleventh-largest.

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