UK Leapfrogs Japan, Italy and Germany in 2024 OECD…

The forecast of 1.1% growth for the whole of this year puts the UK alongside Canada and France, but behind the US.

The last time the OECD published a forecast, in May, it had the UK at the bottom of the seven-country informal bloc, which also includes Japan, Italy and Germany.

Its inflation forecast of 2.7% for this year means the UK is still the G7 country with the fastest rising prices.

The OECD wrote in its interim report on the world economy that global economic growth “remained resilient and inflation continued to moderate”.

He added: “Recent activity indicators suggest continued momentum, particularly in services sectors. Rising real wages are now supporting household incomes and spending, although purchasing power has not yet fully returned to pre-pandemic levels in many countries.

“Global trade is recovering faster than expected, but shipping costs remain high and export orders have moderated recently.”

But he added: “significant risks remain. Lingering geopolitical and trade tensions could increasingly hurt investment and raise import prices.”

It comes after the OECD said last week that the UK’s economic outlook was improving “gradually”, upgrading its forecasts for UK growth to 1.1% in 2024 and 1.2% in 2025.

The OECD has called on Chancellor Rachel Reeves to not just raise taxes but look at wider reforms to the tax system ahead of October’s budget.

While the UK has climbed several places in this year’s forecasts from the OECD’s last forecast in May, it is set to enjoy only the fourth-fastest joint growth in 2025, ahead of only Germany and Italy.

UK inflation is on track to remain at 2.4% for 2025, rising at the fastest pace in the G7.

Reeves said: “I welcome faster economic growth figures 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 rebuilding Britain.”

By Alex Daniel, PA Business Reporter