Britain’s economic growth predictions upgraded by think tank in Brexit boost for Philip Hammond ahead of tomorrow’s Spring Budget
The OECD said the UK would grow 0.4 per cent faster in 2017 than it previously expected
THE CHANCELLOR got a bumper eve-of-Budget boost yesterday as the world’s leading economic think tank upped its UK growth forecasts
The Paris-based OECD said it now expected Brexit Britain’s output to grow by 1.6 per cent this year – up from 1.2 per cent in November.
It said today that the pace of expansion was still below growth for 2016 - despite support from resilient household spending and fiscal stimulus following the Brexit vote.
said: "UK growth is expected to ease further as rising inflation weighs on real incomes and consumption, and business investment weakens amidst uncertainty about the United Kingdom’s future trading relations with its partners."
But Tory MP Jacob Rees Mogg said the revised figures were another example of experts having to “eat their words” after doom-laden predictions about a Brexit after the Referendum.
He told the Sun: “It is hard to believe that there wasn’t a conspiracy of thought if not of action amongst all these high-falutin bodies to obstruct Brexit as much as they could.
“It’s a delight to see them eating their own words.
“I hope it doesn’t force them to get too fat.”
The Prime Minister’s official spokesman said: “The economy has outperformed the expectations of many people it means we are going into the Brexit negotiations from a position of strength.”
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It warned that house prices and "underlying tensions" in financial markets could affect the growth forecasts in future.
Today's forecast means the UK will grow at a faster rate than France and Japan this year.
The OECD's previous warnings about the UK suffering immediate and extensive economic damage following the referendum proved to be untrue.
The Bank of England earlier this month was forced to admit it had got it wrong on Brexit when it upgraded its 2017 growth forecast to 2 per cent. It was predicting just 0.8 per cent immediately after the Brexit vote.
The Treasury’s independent economic forecast – the Office for Budget Responsibility – is expected to follow suit with upgrades of its own tomorrow.
Mr Hammond has vowed not to engage in a "spending spree" in the Budget, as he wants to make sure the country has enough "gas in the tank" as Britain gears up to trigger Article 50.
But in a plea to politicians across the West, the OECD today urged Governments to use any spare money they have to kick-start their economies – and cut inequality.
It said: "countries should use increased fiscal space to implement effective fiscal initiatives that boost demand and make government taxes and spending more supportive of long term growth and equity".
And in a warning to the Chancellor, the OECD warned “rapid house price increases” in the UK could herald a future downturn.
It said: “As past experience has shown, a rapid rise of house prices can be a precursor of an economic downturn. House price to rent ratios are at record highs in several countries and above long-term averages in many others.”
The Chancellor is expected to announce more funding for the NHS and social care tomorrow, along with changes to taxes, beer duty and more money for new schools.
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