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Britain will overtake France to become the second-biggest economy in Europe behind Germany next year, the International Monetary Fund has said.

It predicts growth of 3.2 per cent in the UK this year and 2.7 per cent in 2015, compared with just 0.4 per cent and 1 per cent in France.

The estimates mean output in Britain will total £1.9trillion next year – outstripping the £1.8trillion France is expected to produce. However, the UK still lags behind Germany’s £2.4trillion economy.

All smiles: By next year, Britain’s economic output is set to top £1.9trillion after growing by 3.2 per cent this year and 2.7 per cent next year, outstripping the £1.8trillion France is expected to produce,

The figures, in the IMF’s World Economic Outlook, will be a boost for George Osborne.

But they are an embarrassment for Labour leader Ed Miliband, who has closely aligned himself with France’s socialist president Francois Hollande.

Mr Hollande swept to power in 2012 as an old-fashioned socialist, promising to take on the rich and big business, but is now the least popular French leader on record.

The economy remains in a rut – France has been labelled ‘the sick man of Europe’ – and unemployment is 10.5 per cent, compared with 6.2 per cent in Britain.

Chris Williamson, chief economist at research group Markit, said France was being held back by its ‘increasingly bloated public sector’ with government spending among the highest in the world at 57 per cent of total national output.

France is the biggest country in the EU, with a population of about 67million – compared with 64million in the UK.

In 2009, the French economy was worth £1.7trillion compared with £1.4trillion in the UK, according to IMF figures.

But the Fund, whose managing director Christine Lagarde and chief economist Olivier Blanchard are French, is now expecting Britain to stretch ahead. 

France, the largest country in the EU, is being held back by a ‘bloated public sector’, according to the IMF, and huge public spending under socialist President Francois Hollande (pictured)

It is expected to be the fastest-growing major economy in the developed world this year. And by 2019 it is forecast to be worth £2.3trillion while French output is set to total £2.1trillion, according to the IMF. The German economy is forecast to be worth £2.8trillion in 2019.

The IMF this week slashed its growth forecasts for the eurozone and said there is a 40 per cent chance of recession.

Meanwhile, George Osborne yesterday called for ‘fiscal discipline’ across Europe as he warned there was no such thing as ‘a free lunch’.

The Chancellor said he was sceptical about calls for extra public spending at a time when many countries were struggling to balance the books.

His warning came as stock markets across Europe tumbled amid fears of recession and Japan-style deflation.

The FTSE 100 index sank 91.88 points to 6339.97 in London – its lowest close for a year.

France and Italy have urged the EU to relax its budget rules, while the IMF has called for more spending on infrastructure.

But Mr Osborne said: ‘You can’t then go breaking the rules at the first test.’

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