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Reality Check: Is UK still the world's fifth biggest economy?

27 October 2016

The claim: The falling pound has made the UK the world’s sixth biggest economy, down from fifth. Reality Check verdict: The World Bank produces the rankings which are based on average exchange rates over the period. The UK has not fallen behind France so far. Figures as diverse as Jeremy Corbyn, the Labour leader, and Lord Livingston, the former Conservative trade minister, have said the UK has slipped down the rankings and is now the sixth-largest economy in the world. In an article in the Telegraph, former trade minister Lord Livingston wrote: “In the long term, this is unacceptable for the sixth-largest economy (it was the fifth largest, but the fall in the pound since June means we have fallen behind France).” Sixth place would put the UK behind the US, China, Japan, Germany and France in US dollar terms, with France having leapfrogged the UK into fifth. It is all down to exchange rates, in theory. If the pound is almost a fifth weaker against the US dollar since the EU referendum, our annual GDP of about £1.8 trillion is worth fewer dollars, dropping us down the table. Newspapers were full of the news that the UK had slipped to number six after the vote to leave the European Union, pointing out that if you applied the weaker pound exchange rates to the output of the economy in 2015, France did indeed come out ahead of the UK. But that’s not how it works. The World Bank produces the rankings. It takes official annual GDP figures and then converts them into US dollars using an average exchange rate for the whole year. The GDP figures for 2015 based on exchange rates from last year rank the UK at number five. So will the slide in exchange rates move the UK down the World Bank’s table in 2016? It might.

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