The size of the British economy has slipped below that of France for the first time since 1999 thanks to the slide in the value of the pound.

Sterling’s rapid fall to 11-year lows against European currencies has also pushed Britain into sixth place in the world.

The US, Japan, Germany, China and France all had larger economies than the UK in the third quarter of 2007 – and in 2006.

The figures represented a “political economic cataclysm” for Britain, said Martin Weale, the director of the National Institute of Economic and Social Research, who noted that the UK government often boasted of Britain’s being the fourth largest economy, and then the fifth largest when China overtook the UK in 2005.

The UK’s demotion to sixth place will put pressure on the government’s reputation for economic competence, particularly as it is Britain’s ancient rival, France, that is moving ahead.

Mr Weale said that, although the change in rank had no immediate effect on British living standards and the UK still had slightly higher gross domestic product per head, the falling exchange rate would crimp income growth compared with overall growth in economic output.

In 2006, the GDP of France was €1,792bn (£1,353bn) compared with £1,304bn for the UK. With sterling worth €1.47 on average in 2006, this put the UK economy comfortably 6.7 per cent ahead of the French economy.

But with sterling’s more than 10 per cent fall against the euro in the past six months to €1.32 to the pound, the UK’s economy in 2008 is now 4 per cent smaller than France.