Chancellor George Osborne has been given a boost ahead of his Autumn Statement as the UK’s growth forecast was upgraded by a leading economic body.
In its latest assessment of the global economy, the Organisation for Economic Co-operation and Development (OECD) upgraded the UK’s forecast growth for next year to 2.4%, up from its previous prediction of 1.5% in May.
The Paris-based organisation said the global recovery was “real” but moving at a “slow speed” and warned that there could be further turbulence ahead.
It particularly cautioned that political brinkmanship over the US economy could derail progress.
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.”
The OECD’s report said there had been a “turnaround in private- sector confidence” in the UK, and “growth is projected to strengthen further in 2014 and 2015, mainly supported by an upturn in gross fixed investments and exports”.
With the Chancellor due to make his Autumn Statement on December 5, the OECD warned against any deviation from the Government’s efforts to balance the books and called for action to restrict the rise in house prices.
“While headline deficits are expected to shrink as growth recovers, it is important to maintain existing consolidation plans to restore fiscal stability,” the OECD commented.
“Further relaxing the barriers holding back housing supply is an important policy priority to contain house price inflation.”
The body also noted that “real earnings have continued to fall, with inflation exceeding weak nominal wage growth”.
Although there has been strong employment growth “the unemployment rate remains high and many workers would like to increase their working hours, which suggests an additional margin of slack”.
The shadow treasury chief secretary Chris Leslie said: “After three damaging years of flatlining, this OECD forecast for the UK is welcome but for millions of families this is still no recovery at all.”