…By Judah Olanisebee for TDPel Media. OECD Upgrades UK’s Growth Prospects, Predicting No Recession as Jeremy Hunt Pledges to Tackle Inflation
The Organisation for Economic Co-operation and Development (OECD) has made a significant upward revision to its growth predictions for the UK, stating that the country will not enter a recession this year as previously anticipated.
This follows a similar shift in forecasts by the International Monetary Fund (IMF).
Instead of the previously projected 0.2 percent downturn for this year, the economy is now expected to expand by 0.3 percent.
Furthermore, GDP growth in 2024 is forecasted to be 1 percent, up from the previous estimate of 0.9 percent.
Jeremy Hunt, a prominent political figure, welcomed the positive change and attributed it to measures aimed at strengthening childcare support and maintaining competitive business taxes.
However, despite the upgrade, the UK’s growth performance remains relatively lackluster compared to historical standards and trails behind most G7 countries.
Only Germany, which recently experienced a recession and is expected to stagnate in 2023, is projected to fare worse.
G7 Economic Outlook:
Among G7 nations, the United States is expected to be the best-performing economy, with a forecasted growth rate of 1.6 percent this year, gradually easing to 1 percent by 2024.
This can be attributed, in part, to President Joe Biden’s substantial fiscal stimulus package aimed at cleaner industries.
The OECD’s chief economist, Clare Lombardelli, emphasized that while the global economy is showing signs of recovery, sustained and robust growth will require further efforts.
UK Growth Factors and Challenges:
The OECD report highlighted that government investment and spending, particularly in measures supporting energy bills, will play a crucial role in propping up the UK economy.
As energy prices decrease, inflation is expected to ease, and global economic conditions are anticipated to improve.
However, weak household income growth, along with monetary tightening and persistent uncertainty, is likely to dampen consumption and hinder business investment.
The report also highlighted the importance of fully utilizing women’s skills in the labor market, urging swift implementation of the government’s childcare measures to enhance workforce participation.
Unemployment and Inflation Concerns:
The OECD predicts a rise in unemployment, with the rate expected to reach 4.5 percent next year.
Additionally, core inflation, excluding food and energy prices, is projected to persist at around 3.2 percent until 2024.
The Way Forward:
The UK Chancellor emphasized the need to adhere to their plan to reduce inflation, recognizing it as a crucial step towards long-term economic growth and alleviating cost-of-living pressures on families.
The OECD stressed the importance of gradually withdrawing energy support measures, except for those benefiting vulnerable households.
Conclusion:
The OECD’s upgraded growth forecast for the UK brings some positive news amidst ongoing economic challenges.
While the avoidance of a recession is certainly welcome, the report highlights the need for continued efforts to address household income growth, business investment, and uncertainty in order to achieve sustained and robust growth.
The focus on women’s participation in the labor market and the implementation of supportive childcare measures reflect a commitment to inclusive economic policies.
However, managing inflation and minimizing its impact on living costs remain crucial priorities.
The coming months will be critical in assessing the effectiveness of the government’s measures and their impact on the UK’s economic recovery.