UK economy forecast to grow faster than major peers

London (Parliament Politics Magazine) – The UK economy is to expand faster than Japan, Italy and Germany this year.

The global economy is “turning a corner”, according to the latest perspective from the Organisation for Economic Cooperation and Development (OECD) as it boosted the UK’s growth forecast for this year to faster than that of Japan, Italy, and Germany. The OECD rated Britain joint second among the G7 developed nations, behind the US, in its most delinquent outlook on the global economy, but the UK is still predicted to have the highest inflation in the group.

What factors are driving the UK’s economic growth?

Representing the UK’s economic evolution as “robust”, the OECD boosted its growth for 2024 to 1.1% from a projection of 0.4% made in May, as the country recovers from a mild slump at the end of last year. The forecast of a 1.2% increase in 2025 was maintained. In the May forecast, the UK was behind all other countries in the informal bloc but is now expected to outpace Japan, Italy and labouring Germany. Britain is now on par with Canada and France but behind the US.

Why is the OECD optimistic about the UK’s future?

The OECD declared the global economy was “turning a corner” and lower inflation and cuts to the expense of borrowing by central banks would help “ongoing momentum” in most major economies. Those conditions would permit the global economy to return to health after the shocks generated by the coronavirus pandemic and Russia’s invasion of Ukraine, it stated.

The OECD’s chief economist, Álvaro Pereira, said he was amazed by the strength of the recovery earlier in the year after the UK economy contracted in 2023. Pereira expressed the UK was in a similar situation to many European countries that required to restrict debt levels. Not by introducing draconian austerity,” he stated, “but it should be said that fiscal prudence is necessary.”

What does the OECD say about global economic trends?

The Paris-based organisation said that global trade was returning to pre-pandemic levels at a more rapid pace than expected after shipping firms found ways to bypass the Red Sea. Meanwhile, weaker inflation represented real incomes had grown and consumer spending recovered in many nations.

The OECD expressed that Asian ports were struggling to adjust ships forced to take longer routes, pushing container expenses up by 160% since last year. Food prices were also punched at much higher levels, decreasing the spending power of people on low incomes.