Britain’s buoyant economy is outstripping several G7 countries in recent economic growth forecasts, in what Brexiteers are certain to hail as a major vindication of the decision to quit the European Union.
However, the UK is still likely to experience the highest inflation within the bloc, according to economists.
The Organisation for Economic Co-operation and Development (OECD) has placed the UK in joint second place in its economic growth projections for the remainder of 2024.
A predicted growth rate of 1.1 percent for the full year positions the UK alongside Canada and France, second only to the United States.
In the OECD’s previous forecast, released in May, the UK was ranked last among the G7 countries, which also include Japan, Italy, and Germany.
Despite the improved growth outlook, a predicted inflation rate of 2.7 percent for this year means the UK continues to have the fastest-rising prices in the G7.
The OECD noted in its interim report on the global economy that economic growth worldwide “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.”
However, the OECD also cautioned: “Significant risks remain.
“Persisting geopolitical and trade tensions could increasingly damage investment and raise import prices.”
This comes after the OECD’s announcement last week that the UK’s economic outlook is “gradually” improving, raising its growth forecasts to 1.1 percent in 2024 and 1.2 percent in 2025.
The OECD urged Chancellor Rachel Reeves to consider broader reforms to the tax system, not just tax increases, ahead of the October Budget.
Although the UK has climbed several positions in growth forecasts for this year compared to the OECD’s May predictions, it is only expected to achieve joint-fourth fastest growth in 2025, ahead of Germany and Italy.
UK inflation is projected to remain at 2.4 percent in 2025, continuing to rise at the highest rate in the G7.
Ms Reeves stated: “Faster economic growth figures are welcome, but I know there is more to do, which is why economic growth is the Government’s number one priority.
“Next month’s Budget will focus on fixing the foundations, so we can deliver on the promise of change and rebuild Britain.”
