7
Apr
UK economy set to outpace most rivals, says OECD
The UK economy is forecast to outstrip its G7 rivals in the
second quarter of this year, says the Organisation for Economic
Co-operation and Development.
The OECD is predicting it will expand at an annual rate of 3.1%,
in line with the government's own Budget forecast.
Such a rate would put the UK ahead of the US, Japan, Germany,
France and Italy - but not Canada, the G7's most raw material-rich
country.
The forecast is backed by the latest surveys of the UK
economy.
The British Chambers of Commerce (BCC) said a double-dip
recession had been avoided and the recovery was "still on course"
in the first quarter.
But on a global level, the OECD cautioned that overall growth
would be slower in the main industrialised nations during the first
half of 2010.
"Despite some encouraging signs on activity, the fragility of
the recovery, a frail labour market and possible headwinds coming
from financial markets underscore the need for caution in the
removal of policy support," its report said.
'Weak' recovery
The British Chambers of Commerce survey of 5,500 UK businesses
suggested the service sector was the main bright spot in the UK
economy.
A separate report on the service sector, in the form of the
purchasing managers index (PMI), suggested that it slowed down in
the last month of the quarter, although that was compared to a
particularly strong figure in February.
The two are not strictly comparable. Unlike the BCC, the PMI
does not include retailers and also only covers the month of
March.
Where the two reports do agree is that the economy is
brightening, although it remains patchy and fragile.
The director general of the BCC, David Frost, told the BBC: "Any
thoughts we may have slipped back have not materialised, but the
recovery needs to be nurtured."
It warned that the recovery was weak and "serious risks of a
setback remain", with the manufacturing sector still
struggling.
Paul Smith, senior economist at Markit, which co-produces the
PMI, said: "The UK recovery remains on track, with the service
sector posting a pace of expansion consistent with those seen at
the end of 2009."
Manufacturing orders for the first three months of this year
were little higher than in the previous three months, according to
the BCC, but new orders continued to fall and employment in the
sector suffered a setback after an encouraging fourth quarter in
2009.
The UK economy emerged from recession in the final quarter of
last year, after six consecutive quarters of contraction.
The latest official figures show the economy grew by 0.4% in the
last three months of 2009, up from the original estimate of
0.1%.
source: www.bbc.co.uk/news Wednesday 7th
April 2010