OECD ups forecast
UK on course for stronger post-Covid recovery
Economic output is growing quickly, says the OECD
The UK economy is poised to grow at an even faster rate than earlier forecasts, according to the Organisation for Economic Co-operation and Development (OECD).
It forecasts a GDP growth of 7.2% this year and 5.5% in 2022, higher than its March projection of 5.1%.
This will confirm predictions of a sharp recovery following last year’s 9.8% contraction, the worst for nearly 300 years.
Chancellor, Rishi Sunak, said: “The strength of the UK’s growth forecast is testament to the ongoing success of our vaccine rollout and evidence that our Plan for Jobs is working.
“It is great to see some early signs that the UK is bouncing back from the pandemic, but with debt at nearly 100% of GDP, we must also ensure public finances remain on a sure footing.
“That’s why at the budget in March I set out steps we will take to bring debt under control over the medium term, ensuring our future recovery is sustainable.”
The UK’s growth is set to be the fastest among the large rich countries, the OECD says.
However, it warned that growth would not be shared evenly.
It said the recovery would remain uneven and vulnerable to fresh setbacks as long as a large proportion of the world’s population were not vaccinated.
While UK GDP is predicted to return to pre-pandemic levels next year, the OECD warns that increased border costs following Brexit will hit foreign trade.
Unemployment is also expected to peak at the end of 2021, with a predicted rise to 6.1% when the furlough scheme ends.
It will reach an average of 5.4% in 2021, above 2020 levels of 4.5% and 2019 levels of 3.8%.
The OECD recommends that the UK government maintains support measures until economic recovery is under way, focusing on businesses and sectors with the best growth prospects.
Global growth will be led by a strong upturn in the US, where GDP is forecast to reach 6.9% this year, before easing to 3.6% in 2022, the OECD added.
Output in China has also caught up, but emerging market economies, including India, may continue to have large shortfalls in GDP.