UK slips behind India to develop into world’s sixth greatest financial system | World News

Britain has dropped behind India to develop into the world’s sixth largest financial system, delivering an additional blow to the federal government in London because it grapples with a brutal cost-of-living shock.

The previous British colony leaped previous the UK within the last three months of 2021 to develop into the fifth-biggest financial system. The calculation relies in US dollars, and India prolonged its lead within the first quarter, in line with GDP figures from the Worldwide Financial Fund.

The UK’s decline down the worldwide rankings is an unwelcome backdrop for the brand new prime minister. Conservative Occasion members select Boris Johnson’s successor on Monday, with International Secretary Liz Truss anticipated to beat former Chancellor of the Exchequer Rishi Sunak within the run-off.

The winner will take over a nation going through the quickest inflation in 4 many years and rising dangers of a recession that the Financial institution of England says might final properly into 2024.

Against this, the Indian financial system is forecast to develop greater than 7% this yr. A world-beating rebound in Indian shares this quarter has simply seen their weighting rise to the second spot within the MSCI Rising Markets Index, trailing solely China’s.

On an adjusted foundation and utilizing the greenback change charge on the final day of the related quarter, the scale of the Indian financial system in “nominal” money phrases within the quarter via March was $854.7 billion. On the identical foundation, UK was $816 billion.

The calculations have been finished utilizing the IMF database and historic change charges on the Bloomberg terminal.

The UK is more likely to have fallen additional since. UK GDP grew simply 1% in money phrases within the second quarter and, after adjusting for inflation, shrank 0.1%. Sterling has additionally underperformed the greenback relative to the rupee, with the pound falling 8% towards the Indian forex this yr.

The IMF’s personal forecasts present India overtaking the UK in greenback phrases on an annual foundation this yr, placing the Asian powerhouse behind simply the US, China, Japan and Germany. A decade in the past, India ranked eleventh among the many largest economies, whereas the UK was fifth.