Britain on the Brink: UK Economy Sliding Out of the Global Premier League

    LONDON, Feb. 11 /CNW/ - Britain is facing an unprecedented fall in its
economic world ranking, according to a newly produced report by country risk
specialists Business Monitor International (BMI). Ranked by GDP per capita,
the UK is set to fall by nine places, from 12th place in 2007 to 21st in 2010.
    Measuring output per capita in US dollars, a key comparative economic
indicator, BMI predicts that the UK will partially recover its world ranking
to 17th by 2013. But the combination of falling output and a devalued currency
suggests Britain will struggle to ever break back into the world's top 12.
(see full table at
    The 60-page BMI report is one of the most bearish yet to be published on
the UK economy. Among its key conclusions:

    -   Britain will suffer a far deeper recession than either the UK
        Treasury or IMF predicts. GDP is forecast to contract by 3.5% in
        2009, followed by a shallow 0.2% recovery in 2010. Unemployment will
        peak at 3.2 million next year, an 11.2% rate, with the financial
        services sector set to lose 570,000 jobs between 2008 and 2010.

    -   Sterling's steep depreciation is the principle factor behind
        Britain's fall in the league tables; the pound will remain weak for
        the next three years, dragged down by recession, huge budget
        deficits, low interest rates and increasing political risk.

    -   Despite enjoying 11 years of strong growth between 1997 and 2007, the
        UK ran a budget deficit of 1.7% of GDP over this period, fuelling a
        fiscal time bomb. Faced with the financial burden of bailing out the
        banking sector and kick-starting the economy, the budget deficit will
        swell to an unsustainable 9.3% of GDP in 2009, and average 6.7% over
        the following four years.

    -   Property prices will see a cumulative fall of 41%, from peak to
        trough, and could take more than 10 years to recover to the levels of
        2007. The impact of negative equity and declining asset values will
        further serve to depress consumer spending and economic growth.

    In terms of recovery, BMI points out that the UK (still the world's sixth
largest manufacturer) is well placed to benefit from the changing terms of
trade triggered by the slide in sterling (much as it did following its exit
from the ERM in 1992). As import demand falls and UK exports recover, the
long-standing current account deficit should turn into surplus in 2011, and
remain in the black until 2016 at least.

    Notes to the Editor:

    A five-page Executive Summary of this report (with tables) can be
downloaded at

    About Business Monitor International:

    Established in 1984 with headquarters in London, Business Monitor
International (BMI) is recognised as a leading independent source for analysis
and forecasts on Country Risk (political, economic, business and financial)
and Industry, spanning 175 countries. BMI's research is taken by multinational
corporations, banks, funds, research centres and governments in 130 countries
around the world, including more than 400 of the Fortune Global 500 companies.
Further details can be found at

    All media enquiries should be addressed to:
    Terry Alexander, Head of Country Risk, Business Monitor International
    Tel: +44-207-246-5100; email:

For further information:

For further information: All media enquiries should be addressed to:
Terry Alexander, Head of Country Risk, Business Monitor International, Tel:
+44-207-246-5100, email:

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