By Richard Johnstone | 6 May 2014
The Organisation for Economic Co-operation and Development has revised up its forecast for UK growth in 2014 due to what it called the robust pace of the economic recovery. It also backed continuation of government cuts into 2015.
The economic think-tank said it expected the UK to grow by 3.2% in 2014, up from the 2.4% predicted in its last report in November 2013. Expansion would be sustained through both household spending, which has been boosted by high levels of employment, and an increase in business investment. The projection for growth in 2015 has also been revised up from 2.5% to 2.7%, despite a fall in its projections for global growth.
The OECD’s Economic Outlook report also stated the government’s planned spending cuts, which amount to 1% of gross domestic product in 2015, should continue in order to strengthen the sustainability of the public finances. It predicted government borrowing as a proportion of GDP would fall from 5.9% last year to 5.3% in 2014 and 4.1% in 2015.
The report also called on the Bank of England to ‘clearly communicate’ its plans to end quantitative easing and increase interest rates. It expected the bank to keep the base interest rate at their current historic low of 0.5% until the middle of next year.
• In a separate report today, the European Commission predicted the UK would grow by 2.7% in 2014 and 2.5% in 2015 – faster than the economic bloc’s overall rate of 1.6% and 2% respectively as it recovers from the eurozone crisis.
