The Organisation for Economic Co-operation and Development (OECD) has upgraded its UK growth forecast for 2017 from 1.2 per cent, which was predicted in November, to 1.6 per cent. Factors which were taken in to account included the Bank of England’s stimulus package and the easing of fiscal austerity in the wake of the Brexit vote. Despite the large jump for the UK growth forecast, it remains below the 2016 growth figure of 1.8 per cent. Although it has been revised upwards, it is far below the United States’ and Canada’s predicted growth of 2.4 per cent. The United Kingdom, however, is expected to grow at the same rate as the Eurozone in 2017.
The OECD left its forecast for 2018 unchanged at 1 per cent. Looking forward, the report stated: “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.” The Bank of England’s forecasts show price growth of above 2 per cent for the next three years, rising to 2.8 per cent by the end of 2018. The latest estimates for wage growth, published in February, place it at 2.6 per cent, slower than the previous period. This serves to heighten the impending possibility of inflation out-pacing wage growth.