The world's leading economies have returned to positive growth for the first time since the spring of last year. The Organisation for Economic Co-operation and Development, which comprises the 30 most-developed nations, said their combined growth rate for the third quarter of this year was 0.8 per cent – compared with zero growth between April and June.
The news came as Prime Minister Gordon Brown and Dominique Strauss-Kahn, the managing director of the International Monetary Fund, warned UK business leaders that governments should not withdraw economic stimulus packages too soon.
Addressing the Confederation of British Industry's annual conference in London yesterday, Mr Strauss-Kahn said: "The economy remains very much in a holding pattern: stable and getting better but still highly vulnerable ... It is difficult to claim that the crisis is over when unemployment is at historic highs and getting higher still."
The Prime Minister insisted that his government would maintain its economic stimuli, saying: "Choking off recovery by turning off the life support for our economies prematurely would be fatal to British jobs, British growth and British prosperity for years.
"So that's why we will continue with our current plans to support our economy until the private sector recovery is established, and we will ensure that nothing we do will jeopardise that recovery."
However, Charles Goodhart, a senior economic consultant to Morgan Stanley and a former Bank of England policymaker, said the Bank should consider withdrawing its programme of quantitative easing, which injects money directly into the economy.
"It would seem to us unwise for central banks to be injecting much more liquidity into the system given the scale of equity market rallies and sizeable currency moves," he said. "Now is a time when central bankers can pat themselves on the back for a job well done, but they should also recognise that there can too much of what has been a good policy. Perhaps on this front it is time to declare victory, and prepare to withdraw."
Mr Brown also told the CBI: "If we are to have balanced and sustained growth that will keep unemployment low, we will have to address together – and my chosen vehicle is the G20 – a strategy for global growth, addressing global imbalances in trade and currencies, addressing the inefficient use of reserves, the instability in oil prices, and agree together the contribution to higher growth that each continent can make together."
According to the OECD's figures, all the developed nations – with the exception of France – registered an accelerating growth rate or, in the case of the UK, a reduced rate of contraction. India and China, which are growing faster than the established economies, are not OECD members. Mr Strauss-Kahn was more direct in his message to Beijing, saying: "If we are to have sustained global growth, somebody else needs to step in. China and other emerging Asian economies are shifting from exports to domestic demand but they have some way to go."
Turning to Britain's budget deficit, which is believed to be approaching £200bn, Mr Brown said: "People need certainty. They need to know if there is a stable path of deficit reduction they can see will take place."
The Conservative leader David Cameron, meanwhile, called the deficit "the greatest single risk to sustained economic recovery ... Even the risk of tipping back into recession".
Mr Cameron said that if the Tories were returned to government, the Bank of England would be given more power.
"[It] should be put back in charge of two vital things: one is the overall level of debt in the economy, being able to call time on debt in the economy," he said. "And secondly, to put the macro-prudential regulation of banks and financial services back in the Bank of England ... makes sense."Reuse content