UK set to become poorer than Malta by 2035
While the UK’s economy is expected to continue growing by the end of the decade, growth in GDP per capita – a proxy for living standards – will be the second weakest in the G7 over the next five years. As a result, the country is expected to slip down the rankings to behind Malta by 2035.
This is according to the latest edition of the World Economic League Table, WELT 2026, which is produced by international economic forecasters, the London-based Centre for Economics and Business Research (Cebr). The WELT tracks the size of different economies across the globe, and projects changes over the next 15 years up to 2040.
The data shows that Global GDP growth is expected to amount to 2.6% in real terms in 2025, easing from the 2.8% recorded in 2024. Elevated uncertainty stemming from shifts in the global trade order due to US tariff increases has weighed on activity.
In contrast to other forecasters, the Cebr expects global GDP growth to ease marginally to 2.5% in 2026, as the spillover effects of higher US tariffs continue to weigh on global trade and investment.
This is reinforced by its below-consensus outlook for the US: tech-driven capital spending is expected to remain supportive, but a weakening consumer environment and the emergence of a dual-speed economy are expected to constrain the overall pace of expansion.
China and India to dominate
The long-range projections indicate that China is now expected to overtake the US as the world’s largest economy by 2045, earlier than envisaged last year, driven primarily by downgrades to the US’ long-term outlook, rather than a material structural improvement in China’s own performance.
India remains firmly on track to solidify its position as a global economic powerhouse. In 2026, it is projected to supplant Japan to become the world’s fourth-largest economy. In 2028, it is expected to cross the $5 trillion milestone and by 2029, overtake Germany, securing its place as the world’s third-largest economy. The Cebr continues to project that India will reach 10 trillion dollars by 2036 and become the world’s largest economy by the end of the century.
“As global growth moderates, wide-ranging differences in economic performance are becoming more pronounced, pointing to a gradual rebalancing of economic power. Near and medium-term challenges of over-indebtedness, above-target inflation, inability to shrink state spending, and ageing populations remain evident across many economies, with US-imposed tariffs and geopolitical tensions fanning the flames,” said Nina Skero, Chief Executive of Cebr.
Skero noted that Europe has been at the forefront of many of these struggles and has seen dwindling growth rates as a result.
“The US has been propelled by the AI boom, but faces its own challenges, including an unsustainable debt path which may trigger a painful financial market correction. Yet other countries, including India and smaller Asian economies, continue to expand due to sustained investment, reform progress, and favourable demographic dynamics.
“Together, these trends underscore a world economy in which resilience varies significantly across regions and where long-term shifts in economic influence are gaining momentum, setting the stage for a more dispersed and dynamic global order.”
A sliding UK
Across much of the developed world, fiscal policy is coming under heightened scrutiny, with recent sharp sell-offs in sovereign bond markets highlighting investor sensitivity to rising debt burdens and increasingly constrained budget positions. As monetary policy gradually normalises, fiscal choices are set to play a more dominant role in shaping medium-term outcomes.
The UK is no exception: while it is on track to overtake Japan and become the world’s fifth-largest economy by 2040 in nominal terms, limited progress in lifting underlying growth means it is projected to slip in the GDP-per-capita rankings, from 19th in 2025 to 21st by 2040, the Cebr said.
The UK stands out as having one of the highest inflation rates amongst developed markets in 2025. Consumer price growth is expected to have averaged 3.4% over 2025, driven by rising energy and food
prices. Mounting labour costs, encouraged by both market dynamics and policy changes, such as increased employers’ National Insurance Contributions, have also fed into faster price growth. By eating into spending power in real terms, this has acted as a constraint on consumer-side activity, as evidenced by slow consumption growth and the continually elevated savings ratio.
Despite inflation being far above the Bank of England’s 2.0% target, interest rates were cut on several occasions throughout 2025, in an attempt to support growth. Nevertheless, meetings of the Monetary Policy Committee in the second half of 2025 have shown divisions, suggesting limited consensus on the trade-off between fighting inflation and supporting demand. Poor economic conditions are further evidenced by the labour market, which has been loosening for
some time.
The unemployment rate is expected to have averaged 4.8% in 2025, its highest reading since 2016. Meanwhile, vacancies have fallen to multi-year lows, suggesting poor hiring demand. The government’s set of policy announcements at the Autumn 2025 Budget did little to support the near-term growth outlook. As such, over the next five years, the annual rate of GDP growth is set to remain subpar, at an annual average of 1.5%.
Nevertheless, the poor performance of other economies of a similar size means that the UK is still anticipated to improve its WELT ranking over the forecast horizon, overtaking Japan to become the world’s fifth-largest economy, while closing the gap on Germany. United Kingdom 2010 2015 2020 2024 202
