LONDON (MarketWatch) — Way back in 1987, the Italian government had a rare moment of economic success to celebrate. The Italian economy had overtaken Britain’s in total size. It was known in Italy as Il Surpasso, and became a symbol of national pride.

Through the 1970s and 1980s, the Italian economy had grown strongly, while the U.K. had stagnated and almost collapsed in the 1970s and early 1980s.

Unfortunately for Italy, it didn’t last.

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After joining the euro, it ground to a halt, and has hardly grown since then. But it is a reminder of how the relative position of the major European economic powers changes over time, and often radically.

Another major shift in the hierarchy of wealth is under way right now. On current trends the U.K. will soon be the second largest economy in Europe. Italy and France will be left far behind. Eventually Germany will be overtaken as well.

That matters. As the biggest economy in the region, the U.K. will have greater political weight, it will attract more migrants and investment, and the London stock market will receive a much-needed boost.

The British have grown used to being gloomy about the performance of their economy, and with good reason.

True, there have been a few positive signs recently. A triple-dip recession has been avoided, and the manufacturing sector is showing some signs of life. Overall, however, there is little to celebrate. The economy is still smaller than it was back in 2008. Real wages are stagnant. The deficit shows no signs of coming under control. A huge devaluation of sterling has done little to revive manufacturing industry, and the banking system remains in intensive care.

Success is hardly the first word you would reach for.

And yet that shouldn’t blind anyone to the underlying trend. Britain is set to become the richest country in Europe. How is that possible? Well, economic performance is always relative. It is not that the U.K. is doing particularly well. The economy is struggling to grow at more than 1% a year and may do so for years to come. There is certainly no sign of a sudden acceleration of growth.

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But the rest of Europe is doing much, much worse. The euro crisis has locked the continent into a permanent depression. Once you take that point on board, the math becomes relatively simple. If the rest of Europe is stagnant, or getting smaller, then the U.K. makes relative progress just by staying where it is.

Western Europe is always going to have some small, very wealthy countries. Switzerland has a lot of banks and Norway has a lot of oil. But the major economies are Italy, France, the U.K. and Germany. Italy has been left far behind — the days when it could challenge the U.K. are long gone. According to figures from the International Monetary Fund, Italian gross domestic product per capita is only $30,136. The total size of its economy in 2011, the latest year for which World Bank figures are available, was $2.19 trillion. France’s GDP per capita was $35,548, and the total size of its economy was $2.77 trillion. The U.K., by contrast, has a GDP per capita of $36,941 and a total output of $2.45 trillion.

So the U.K. has easily overtaken Italy, and needn’t worry about it catching up again. Italy has not grown since it joined the euro EURUSD, +0.02% , and anyone who thinks that is likely change is living on some other planet. Likewise, France is struggling inside the euro zone as much as every other country. It has lost competitiveness year-on-year — and shows no inclination to start clawing it back. This is the country that just introduced a tax on smart-phones — because, hey, there is no growth in that industry.

The big question is whether the U.K. can over-take Germany. It has always been Europe’s largest economy, partly because Germans are very good at making stuff, but also because there are lot of Germans —- 82 million of them compared with 62 million in the U.K. Germany has a GDP of $3.6 trillion – about 50% more than the U.K.

But Germany is getting sucked into the euro-zone’s depression. If the U.K. starts to grow consistently faster than Germany over a decade or more, the gap will start to close rapidly.

In reality, the euro zone has locked itself into a permanent depression. Growth has evaporated. Germany is the only the economy still expanding, but with even the Netherlands in recession, that can’t last. The reality is that Germany is fated to a decade or more of declining output just like its neighbors. The only escape is a breakup of the single currency — but that would be chaotic for the economy.

Either way, Germany faces harder times ahead.

There is another factor as well. From 2015, Germany will have a sharply declining population. By 2020, it will have 80 million people, according to the Federal Statistical Office. By 2060, that will be down to 64 million people. By contrast by 2050, the U.K. will be home to 80 million people, according to a report last year by the Population Reference Bureau. So on demographics alone, at some point, the U.K. will overtake Germany.

It is simply a question of when it happens.

That will have big consequences. It will make the U.K. a magnate for immigrants: people gravitate toward the biggest, richest economy in any region, and in Europe that will be the U.K. It will attract investment: companies like to put money into the biggest markets. And it will make the U.K. a far more powerful voice in European politics —- money talks.

There hasn’t been much reason to feel cheerful about the U.K. economy. But in a continent facing permanent depression, it will be the star performer over the next two decades — at least compared to its neighbors, if not the rest of the world.