More goodies from the latest OECD forecasts. Well, actually, they’re not that good from the UK perspective.
The growth forecasts show the UK lagging behind other comparable economies. The OECD predicts that even the Eurozone, when taken as a whole, will grow faster than the UK. The growth in Germany, France and some of the smaller Eurozone countries will more than compensate for recession-gripped Greece, Portugal and Ireland.
Looked at alongside yesterday’s graph, it is clear that part of the steep rise in the UK’s debt and deficit to GDP ratio was due to the steep decline in its GDP and the subsequent weak recovery. Germany went through a dip as severe as the UK’s but it came out of it much faster. As a supplier of capital goods, Germany suffered when the entire world went into recession but profited from the very high growth in other parts of the world (which will be the subject of a future post), enabling it to sell its exports to the recovering economies in Asia.
With such weak growth in the UK, even those who back the government’s long-term strategy are advising it to slow down. Last September I described myself as neither a hawk nor a dove but an owl on public spending – an owl being a hawk that hunts later – (Geddit?), my argument being that we need to cut the cost of public services but that cutting so much so soon is unnecessary and counterproductive. It seems that the OECD is getting a bit owlish too, joining a number of others questioning the need for cutting spending at such a rapid rate.