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.
- 1 Tunisia hotel attack: Locals form 'human shield' to protect hotel from gunman Seifeddine Rezgui
- 2 Iain Duncan Smith's expenses credit card is suspended after he runs up £1,000 debt to taxpayer
- 3 German ethics council calls for incest between siblings to be legalised by Government
- 4 French woman dies in freak bungee jumping accident
- 5 Jennifer Garner and Ben Affleck to divorce and end their 10-year marriage
The moment a Queen's Guard soldier lost it and drew his gun at annoying tourist
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
Greece crisis: The wider lesson is that it’s time to abandon this failed experiment in currencies
'I wish the BBC would stop calling it Islamic State' – David Cameron unleashes frustration at broadcaster
They are neither a 'state' nor 'Islamic': Why we shouldn't call them Isis, Isil or IS
Tunisia beach attack: How can British Muslims respond to the latest outrages?
iJobs Money & Business
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...
£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...
£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...