UK leapfrogs Japan, Italy and Germany in OECD growth forecast for 2024
But economists said Britain will still have the highest inflation of G7 countries over next two years.
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The UK economy has overtaken several G7 countries on economic growth forecasts in recent months, but is still set to have the highest inflation of the bloc, according to economists.
The Organisation for Economic Co-operation and Development (OECD) has placed the UK joint second in its economic growth forecasts for the rest of 2024.
The prediction of 1.1% growth for the whole of this year puts the UK alongside Canada and France but behind the US.
Last time the OECD put out a forecast, in May, it had the UK at the bottom of the pile in the informal bloc of seven countries, which also includes Japan, Italy and Germany.
Its prediction of 2.7% inflation for this year means the UK is still the country in the G7 with the fastest-rising prices.
The OECD wrote in its interim report on the world economy that global economic growth “has remained resilient and inflation has continued to moderate”.
It added: “Recent activity indicators suggest ongoing momentum, especially in services sectors. Real wage growth is now supporting household incomes and spending, though purchasing power has yet to fully return to pre-pandemic levels in many countries.
“Global trade is recovering faster than expected, but shipping costs remain elevated and export orders have recently moderated.”
But it added: “Significant risks remain. Persisting geopolitical and trade tensions could increasingly damage investment and raise import prices.”
It comes after the OECD said last week that the UK’s economic outlook is “gradually” improving, upgrading its forecasts for UK growth to 1.1% in 2024 and 1.2% in 2025.
The OECD urged Chancellor Rachel Reeves to not just raise taxes but look at wider reforms of the tax system ahead of the Budget in October.
While the UK has climbed several spots in forecasts for this year versus the OECD’s last forecast in May, it is only set to enjoy joint-fourth fastest growth in 2025, ahead of only Germany and Italy.
UK inflation is on course to remain at 2.4% for 2025, rising at the fastest rate in the G7.
Ms Reeves said: “Faster economic growth figures are welcomed, but I know there is more to do and that is why economic growth is the number one mission of this Government.
“Next month’s Budget will be about fixing the foundations, so we can deliver on the promise of change and rebuild Britain.”