Britain’s economic growth forecasts have been revised up sharply ahead of the Budget next month, potentially easing fiscal pressures on Chancellor Rachel Reeves.
The Organisation for Economic Cooperation and Development (OECD) has increased its forecast for UK GDP growth in 2024 from 0.4pc to 1.1pc, which is the biggest upgrade of any country in the G7.
This momentum will continue into the following year, the OECD said, with a forecast of 1.2pc growth in 2025. This is up from an earlier prediction of 1pc growth made back in May.
The figures will be welcomed by the Government, which vowed in its manifesto to achieve the highest sustained growth in the G7.
However, they will also raise questions over the Chancellor’s proposed tax hikes, as she has claimed radical action is needed to fix the alleged £22bn black hole left by the Conservatives.
Following the OECD’s latest upgrade, Ms Reeves said: “Faster economic growth figures are welcomed, but I know there is more to do and that is why economic growth is the number-one mission of this Government.
“Next month’s Budget will be about fixing the foundations, so we can deliver on the promise of change and rebuild Britain.”
The latest forecasts come after official data shows the UK economy grew by 0.7pc in the first quarter of the year and by 0.6pc between April and June, driven by strong growth in the services sector.
Increased household spending has been key to recent growth, the OECD said, with customers benefiting from real wage rises as inflation falls.
However, the UK’s latest upgrade was in stark contrast to the OECD’s projections for Germany, which cuts its growth forecast from 0.2pc to 0.1pc for 2024.
It blamed this on a significant downturn across the country’s industrial sector, as well as high rates of savings among households.
The OECD also cut its forecast for Japan from 0.5pc growth to a fall of -0.1pc.
This means UK growth in 2024 is now expected to be the second highest in the G7, outstripped only by the US that will see GDP rise by an expected 2.6pc this year.
Britain is joint second alongside Canada and France, which are also expected to post 1.1pc growth.
However, the OECD said the global economic outlook remained uncertain, particularly as planned tax rises meant businesses were putting decisions on hold.
Early purchasing managers index (PMI) data this week showed a slowdown in private sector growth in September which analysts blamed on Budget uncertainty.
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