Forecasts for UK economy upgraded in latest sign recovery picking up momentum

OECD predicts 1.5% growth this year, up from May forecast of 0.8%

Good news for George Osborne as OECD predicts 1.5% growth this year, up from May forecast of 0.8% (Getty Images)

The OECD today revised its forecast for GDP growth this year to 1.5 per cent, almost doubling its May prediction of 0.8 per cent.

It also revised up its forecasts for some eurozone states, following the bloc’s emergence from recession earlier this year. The multinational think-tank now sees France growing by 0.3 per cent, rather than contracting by 0.3 per cent. The Paris-based OECD also said Germany would grow by 0.7 per cent, up from its previous forecast of 0.4 per cent.

However, it downgraded its growth forecasts for some emerging-market economies, which have seen capital outflows in recent months. It now sees Chinese GDP growing by 7.4 per cent in 2013,  against a previous 7.8 per cent forecast.

“The bottom line is that advanced economies are growing more and emerging economies are growing less” said OECD chief economist Pier Carlo Padoan.

The UK Government’s own forecaster, the Office for Budget Responsibility, is likely to follow the OECD by revising up its GDP forecasts later this year. At the time of the March Budget, it forecast growth in 2013 of 0.6 per cent. But the economy grew by 0.7 per cent in the second quarter alone, after 0.3 per cent growth in the first quarter.