(qlmbusinessnews.com Thurs. 26th Sept, 2024) London, UK —
“Chancellor Welcomes UK's Projected 1.1% Economic Growth in 2024”
The United Kingdom is expected to see stronger-than-anticipated economic growth in 2024, according to a forecast by the Organisation for Economic Co-operation and Development (OECD). The UK is now set to achieve a 1.1% growth rate, placing it in joint-second place alongside Canada and France, just behind the United States.
This new prediction marks a significant improvement from the OECD's previous estimate in May, which forecasted a much lower growth rate of 0.4%. Chancellor Rachel Reeves welcomed the revised figures, suggesting that this uptick in economic performance could boost confidence as the UK prepares for its Budget next month. Reeves remains cautious, however, emphasising that the Budget will focus on “fixing the foundations” of the economy, signalling challenges still lie ahead.
Investment analyst Dan Coatsworth attributed the stronger outlook to factors such as public sector wage increases, the end of train strikes, and a more stable political landscape following July’s general election. The Bank of England's decision to cut interest rates in August is also expected to provide relief by reducing borrowing costs.
The OECD, a globally recognised think tank, described the UK's growth as “relatively robust” but warned that global risks, including geopolitical tensions and trade uncertainties, could threaten investment and raise import costs. Despite the encouraging short-term outlook, the UK's growth is expected to slow in 2025, with a forecast of 1.2%, ranking it fourth among G7 nations, ahead of only Germany and Italy.
Inflation remains a concern, with consumer prices in the UK expected to rise by 2.7% this year and 2.4% next year—higher than in other G7 economies. While the OECD acknowledges that its predictions could change, these estimates are often used by governments and businesses to guide policy and investment decisions.
Alvaro Pereira, chief economist at the OECD, urged the UK government to create “fiscal space” for infrastructure investment, especially for green initiatives. He also called for carefully managed interest rate reductions and decisive action to reduce national debt, which he argued would allow for greater flexibility in responding to future economic shocks.
While the government has set debt reduction as a priority, some economists disagree, advocating for increased borrowing to stimulate growth in the short term, which they believe could help reduce debt in the longer term.
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