The Organization for Economic Co-operation and Development (OECD) believes that interest rates, which are now at a high of 5.25% following the 2008 financial crisis, should remain there.
The UK economy is predicted to “remain sluggish” by the Club of developed Nations study, with GDP growth this year forecast to be 0.4% and 1% in 2025. GDP is a measure of all economic activity.
The OECD has stated that there will be “stronger” wage growth when inflation is taken into account in comparison to wages, which is excellent news for workers in the UK.
Consequently, a “modest pick-up” in household consumption will be supported.
The OECD stated that although price increases will persist, inflation is expected to be “elevated” at 3.3% in 2024 and 2.5% in 2025, exceeding the Bank’s aim of 2%.
