Rose-coloured glasses tint OECD's view of UK

Not everyone is as optimistic about the economy, says Diane Coyle

Testimonials rarely come more glowing than last week's report on the British economy from the Organisation for Economic Co-operation and Development. The Government was swift to welcome the organisation's conclusion that the economy has become more competitive and less inflation- prone as a result of policies introduced during the 1980s. Britain can look forward to sustained growth and low inflation, it said.

The OECD is just one of many economic forecasters. Each month the Treasury publishes a summary of 42 sets of forecasts from public, private and academic organisations. As the selection in the table shows, the OECD is more optimistic about growth this year and next than many other institutions.

Its forecast for Britain is supervised by a Canadian economist, the theory being that a foreign national will be less vulnerable than a Briton to arm-twisting by the Treasury.

A preliminary report is discussed with Government officials, then there are, as the OECD puts it, "revisions in the light of discussions". To be fair, it likes to hint at its views if they genuinely differ from those of the Government, but it shies away from embarrassing one of its bigger paymasters by publishing a hostile assessment.

As it happens, though, there has been little disagreement. The OECD's economists are huge fans of deregulation, free markets and the type of structural reform of the labour market that has gone further in Britain under the present Government than in most other member countries. Given their ideology, they want to believe that these policies will be rewarded by faster growth and lower inflation than in the past.

The organisation's only faint worry is about the temptation for the Government to give way on inflation or public spending in the run-up to the next election. It relegated to a footnote the observation that: "A novelty in this recovery is the sharp break in 'house price inflation' - with benefits for the overall economy."

The other international organisation to publish a forecast for Britain is the International Monetary Fund. The forecast is shown to the Government for comment, but the IMF does not publish its detailed annual reports on member countries. The only occasions for conflict arise when the IMF is intervening - something that has not happened in Britain since 1976. Its forecasts are generally fairly conventional.

Other groups of economic forecasters bring different biases to their predictions. For example, Liverpool University's forecast is based on the assumption that there is a huge amount of spare capacity in the economy. This leads it to the conclusion that there is no inflation risk in the next 18 months.

The figures predicted for key economic indicators in the end vary far less than the interpretations that are put upon them.

According to the Treasury's summary, GDP growth forecasts this year range from 2.4 to 4.0 per cent - both extremes from City economists with an incentive to stand out from the crowd. The non-City range is a narrower 2.6 to 3.5 per cent. Given the uncertainties in economic forecasting, that boils down to "around 3 per cent".

Slower than last year, a bit faster than next, with inflation well under control if not actually on target - it is not a gloomy forecast, but not as relentlessly upbeat as the OECD's recent assessment.

Start your day with The Independent, sign up for daily news emails
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Day In a Page

Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map