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.
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