The OECD has just now released its first economic outlook report since Reeves’ October budget. It’s a mixed bag…
Growth for 2024 has been revised down to 0.9% from 1.1% despite being higher than all European G7 members. That’s lower than the OBR’s growth prediction at the budget which set Reeves’ “fiscal headroom.” The OECD also says massive new public spending will be responsible for a slower decline in interest rates and higher rates of inflation:
“Wage-driven pressures on the price of services and the fiscal stimulus will keep underlying price pressures elevated, leaving headline inflation above target over 2025-26… persistent price pressures on the back of the strong increase in government expenditure and uncertainty about the degree of slack in the labour market could require the monetary stance to remain tighter for longer.”
The report adds that “tax receipts will keep rising to historic highs of more than 38% of GDP over the next two years.” Cheers…
UPDATE: At PMQs Starmer refuses to commit to his manifesto pledge to make Britain the fastest growing economy in the G7 and cheered the UK’s forecasts to be the “fastest growing major economy in Europe in the next two years.” Not the same thing…
Speaking to Sky News off the back of Rachel Reeves’ Air Passenger Duty hike, Ryanair chief executive Michael O’Leary said:
“Labour is dependent on those Red Wall seats, and yet every move she makes poisons economic growth and damages the UK’s recovery… it’s the Chancellor who stumbles from policy misstep to policy misstep… I think her policy decisions are incredibly stupid.”