OECD predicts turning point for UK economy

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A “turning point” in the UK’s fortunes could come within the next six to nine months, according to the Organisation for Economic Co-operation and Development (OECD

This follows figures released earlier this week that unemployment levels have dropped, with a fall of 7,000 in the number of UK jobless in the quarter to July.

The OECD's forecast will come as a boon for George Osborne who said last week that he could see “positive signs” in the economy, despite negative forecasts from several quarters.

At a recent CBI dinner the chancellor said, “Our economy is healing – jobs are being created, manufacturing and exports have grown as a share of our economy, our trade with the emerging world is soaring, inflation is down, much of the necessary deleveraging in our banking system has been achieved, and the world is once again investing in Britain.”

Despite the moderate optimism for the UK, the OECD pointed to more global stagnation, with a slowdown in the coming months in Italy, China, India and Russia, and weak growth in France and Germany.

The Paris-based economic think-tank did warn that UK would fail to pull out of its double-dip recession in the current quarter, citing the eurozone debt crisis as hampering economies on a global scale and called for increased policy action to generate confidence.

Recently the OECD predicted a 0.7% contraction in 2012, a sharp revision to its earlier estimate made in May, when it forecast growth of 0.5%.

Osborne has been under mounting pressure from both sides, with Labour calling for him to abandon “failed” austerity measures and those within his own party suggesting they should be deepened.

The government have launched a number of schemes to boost the economy in the last month including a cutting of red tape for building projects as part of the Infrastructure Bill and a government-backed "business bank" to increase lending to UK companies.

 

Raymond Doherty

 

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