QUELLE horreur! Britain’s economy has been overtaken by France and, according to economists, could even fall behind Italy next year. On the eve of the visit to London of Nicolas Sarkozy, the French president, new figures show that the economic crisis has pushed Britain well down the international league table.

Th e country’s f all t o become the sixth largest economy in the world, behind America, Japan, China, Germany and France, reflects the pound’s slump to record lows against the euro. A year ago the UK economy was 8% bigger than that of France, measured by gross domestic product (GDP). Now, according to the Centre for Economics and Business Research (CEBR), it is 14% smaller.

Britain has also dropped to sixth place in the world on another measure which adjusts for short-term exchange rate fluctuations. These figures, compiled on a so-called purchasing parity basis, show that India is now a bigger economy than Britain, along with America, Japan, China and Germany.

“An overvalued sterling has inflated the UK’s claims to be among the top five world economies,” said Ben Read, an economist with the CEBR. “The drastic reduction in sterling’s value has accelerated the inevitable process of the UK falling down the league table of world economies, as India and Brazil catch up and overtake the UK’s national output.

“The rapid change in sterling’s value also serves to show the folly of ranking world economies in terms of their current dollar exchange rate. Where the UK’s comparative output ‘benefited’ from sterling’s rapid rise up to 2007, we now see the UK overtaken by France, despite both countries seeing a fairly similar economic performance over the past year.”

There could be worse to come. At present Britain’s GDP is 6% bigger than that of Italy. Next year, according to CEBR, it will drop below.

This would be a remarkable turnaround. In the mid1980s Bettino Craxi, then the Italian prime minister, keen to give his country a bigger voice on the world stage, asked official statisticians to reclassify Italy’s famously bloated black economy as part of the officially measured GDP.

The result was that Italian GDP overtook the British. The stunt almost backfired when Jacques Delors, then president of the European commission, wrote to the Italian government demanding larger contributions to the EU.

Despite this artificial boost, Britain overhauled Italy in the final months of John Major’s government in 1997 and two years later became a bigger economy than France, thanks to strong British growth and a high pound.

For most of Tony Blair’s time as prime minister, Britain’s was the fourth largest economy in the world, before China overtook it in 2006.

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