ZCZC
BCN-41
UK-ECONOMY-GROWTH
UK economy to enjoy moderate economic growth: OECD
LONDON, Nov. 22, 2018 (BSS/Xinhua) – The British economy is forecast to
grow by 1.3 percent this year, and by 1.4 percent next year, according to a
forecast released on Wednesday by the Organization for Economic Cooperation
and Development (OECD).
The economic forecast for GDP growth was revised upwards for next year by
0.1 percentage point, despite the uncertainties of Brexit. However, GDP
growth in 2020 was forecast at just 1.1 percent.
The British economy has enjoyed just modest performance since the Brexit
referendum in June 2016 set the country on a path to leave the 28-nation
bloc, with economic growth rate languishing near the bottom of the table of
G7 advanced nations.
But the OECD’s latest forecast puts the British GDP growth rate this year
and next above its G7 peers Italy and Japan.
Both private consumption and investment growth have slowed markedly since
2016, reflecting uncertainties and a decline in households’ purchasing power,
the OECD noted in an annual report on the British economy.
Inflation is currently above the central bank the Bank of England’s
mandated target of 2 percent and the OECD forecasts that it will stay above
that rate until 2020, while a low unemployment rate of 4.1 percent will
continue.
OECD chief economist Laurence Boone told Xinhua on Wednesday afternoon:
“Inflationary pressure from wages remains low in the UK, but past currency
depreciation, and more recently, higher commodity prices, have elevated
inflation temporarily.”
The OECD noted Brexit as a possible headwind, and called on the
authorities to stand ready to react should there be no Brexit agreement.
Monetary policy conditions should remain accommodative if demand is
depressed, and In addition to letting the automatic fiscal stabilizers fully
operate, the government should focus on measures that foster productivity and
inclusive growth in the long term, such as greater spending on training and
low-skilled workers, the OECD advised.
Poor growth in productivity in Britain has held back wage growth, but the
circumstances behind Britain’s poor performance are also seen in other
developed economies.
Boone said: “Productivity is a longstanding issue in the UK, as it is
across the OECD, but we do not see any instant solutions. Investing in
education and skills is the key to elevating productivity growth over the
longer term.”
BSS/AFP/HR/1455