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OECD cuts UK growth estimates

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by Kay Mitchell

Influential think tank, the Organisation for Economic Co-operation and Development (OECD), has cut its forecast for UK economic growth.

The Organisation estimated growth this year of 1.5%, down from its November prediction of 1.7%.

The reduction was attributed to Government spending cuts, which will hamper growth. However, the OECD described the cuts as “ambitious and necessary”.

In comparison, the independent Office for Budget Responsibility’s forecast is for 1.9% growth this year.

In the meantime, the OECD called on the Bank of England to keep monetary policy loose, despite stubbornly high inflation.

The OECD lifted its forecast for UK inflation this year to 3.3% from its November estimate of 2.6%.

Inflation is currently running at 4% – double the Government’s 2% target. However, the Bank of England has previously said inflation will fall back to its target by 2012.

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News posted: March 16, 2011

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