OECD Growth Upgrade Is Boost For Chancellor

By Ed Conway, Economics Editor

George Osborne has been handed a further fillip as the Organisation for Economic Co-operation and Development upgraded its forecast for UK economic growth by more than any other major economy.

The OECD said it expected Britain's economy to grow by 1.4% this year and 2.4% next year – higher than the 0.8% and 1.5% respective rates it was forecasting in its last Economic Outlook in June.

It is the biggest upgrade for any of the world's major economies.

The OECD upgrade follows on the heels of the International Monetary Fund, which also upgraded Britain's economic growth projections by more than any other leading country in October.

It is the latest boost for the Chancellor, who is expected to present an improved picture of the UK economy in his Autumn Statement next month.

George Osborne will be making his Autumn Statement on December 5

A Treasury spokesman said: "The OECD have revised their forecast for UK GDP up by more than any other G7 country over the next two years. This provides more evidence that the UK's hard work is paying off and the country is on the path to prosperity.

"Today's report also highlights the risks that remain to the recovery and urges the UK to stick to the government's plan that is growing the economy, lowering the deficit and inflation, and creating jobs. This is the only sustainable way to raise living standards for hardworking families."

However, the OECD's Economic Outlook did warn that the UK faced a number of risks in the coming years – one of which was the possibility of an overheating housing market.

It said: "The recently established government 'Help to Buy' property programme needs to be carefully monitored, as planned, and swiftly adjusted if it risks triggering sharp increases in house prices as a result of supply rigidities."

The Paris-based organisation said the Bank of England should consider raising interest rates towards the end of 2015. However, some economists think the moment of tightening will come even sooner than that.

:: Spreadsheet comparison of OECD forecasts

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