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The UK remains at risk from “lingering” inflation but its economy is among nations showing “robust” growth, according to a biannual report which upgrades its expectations for output both this year and next.
The Organisation for Economic Co-operation and Development (OECD) saw UK gross domestic product (GDP) rising by 1.1% this year – faster than the euro area combined.
That compared to a figure of just 0.4% it had forecast for 2024 back in May.
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It marked one of the biggest upgrades to forecasts among the Paris-based club’s 38 member states.
Its predictions, the OECD cautioned, continued to be at the mercy of world events following a succession of shocks in recent years from COVID, Russia’s invasion of Ukraine and the conflict in the Middle East.
The UK upgrade largely reflected the better-than-expected performance seen during the first six months of the year when the country exited the recession of the second half of 2023.
The downturn was widely blamed by economists on the impact of Bank of England interest rate hikes to bring down inflation.
In its update, the OECD said a high pace of wage growth, while moderating, remained a threat to the UK inflation outlook.
It also pointed to continued pressure from services price inflation.
The findings chimed with recent commentary from the Bank of England that it would take a cautious approach to further interest rate cuts, following the shift to 5% from 5.25% seen in August.
The OECD suggested UK growth would accelerate mildly to 1.2% during 2025 – a timeframe ahead that is currently shrouded in mystery as…
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