UK economy set to grow 7.2 per cent this year, OECD forecasts
The UK’s economy is set to grow at its fastest rate since the second world war this year and in 2022, the Organisation for Economic Co-operation and Development (OECD) has forecast.
After the Covid-19 ravaged economies, the UK suffered a 9.8 per cent contraction in 2020 – its worst in nearly 300 years.
The organisation anticipates a GDP growth of 7.2 per cent this year and 5.5 per cent in 2022.
The OECD has warned that global recovery is now at a “critical stage” and unequal vaccine distribution could swell global economic disparities.
The collision of Brexit and the pandemic may also hinder the UK more than other G7 nations – while the UK’s losses will likely far surpass that of Japan, Canada and the US, according to OECD.
“Declines in potential output growth in major euro area members could be 0.3 percentage point per annum on average over 2019-22,” it said.
“The United Kingdom could suffer the biggest reduction amongst G7 countries (a decline of 0.5 percentage point per annum), in part reflecting the additional adverse supply-side effects from 2021 following Brexit.”
A “rebound of consumption, notably of services” has stoked positive growth and GDP is anticipated to return to pre-pandemic levels in the early months of next year.
“Keeping up the pace of vaccinations and responding to emerging virus mutations are key challenges going forward,” the OECD added.
Global GDP growth has been estimated to be around 5.8 per cent this year.
“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,” chancellor, Rishi Sunak, said in response to the OECD’s outlook.
“It is great to see some early signs that the UK is bouncing back from the pandemic, but with debt at nearly 100 per cent 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.”