Let's keep this miracle in perspective: Comment
Tuesday 17 December 1996
Conservative triumphalism about this week's report from the OECD is focusing on the fact that it predicts the UK will have the second-fastest growth rate in the G7 for the next two years, and has enjoyed higher than average growth since 1993. It should be borne in mind, however, that UK growth was lower than the G7 average during the precedingdownturn. The new forecasts thus demonstrate the well-known fact - that the British economy is more volatile than most others.
The organisation reserves its real praise for the fact that it reckons inflation will remain in abeyance at least until 1998, the fifth year of growth at or above trend. According to the OECD, the new flexibility of the labour market is paying off, with no sign of upward pressure on wages. Look at the detail, however, and you see that the OECD is going out on a limb to justify these forecasts. Its economists reckon that only a quarter-point rise in base rates is required to keep inflation below the 2.5 per cent target. This is a good deal more optimistic than others. Most economists are talking about base rates rising from the current 6 per cent to more than 7 per cent in a year or two.
And despite the OECD's optimism, it is still predicting that the UK inflation rate will remain one of the highest in the G7. Sceptics might note that it is easy to achieve a better than normal performance in a low-inflation world. The longer the economy grows at an above-normal pace, and the faster unemployment falls, the greater the danger that wages and inflation will pick up.
Children's bookseller wins The Independent's new author search
Board creates magnetic field to achieve lift
- 1 Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
- 2 Banksy arrest hoax: Internet duped by fake online report claiming artist's identity has been revealed
- 3 Former East 17 frontman Brian Harvey turns up at Downing Street and 'demands to speak to Prime Minister'
- 5 Paralysed man Darek Fidyka walks again after treatment by British doctors on brink of 'cure'
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
Jose Manuel Barroso warns David Cameron against making 'historic mistake' over immigration reforms
Worst Airports of 2014: Poll names Islamabad airport in Pakistan worst in the world
iJobs Money & Business
£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...
£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...
£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...
£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...