The UK’s GDP increased by 1.1% this year, according to the Organization for Economic Co-operation and Development (OECD), outpacing the growth of the euro area as a whole.
Among the 38 member states of the Paris-based group, it represented one of the largest improvements to forecasts.
The OECD warned that despite a slew of shocks in recent years, including the COVID-19 pandemic, Russia’s invasion of Ukraine, and the strife in the Middle East, its predictions remained vulnerable to global events.
The country’s better-than-expected performance in the first half of 2023, when it emerged from the recession of the second half, was primarily reflected in the UK’s upgrade.
Economists largely attributed the recession to the effect of interest rate increases by the Bank of England aimed at reducing inflation.
The OECD stated in its update that although slowing, a rapid increase in wages continued to pose a risk to the UK’s inflation forecast.
It also indicated that pressure from the increase in service prices would persist.
The results aligned with the Bank of England’s recent remarks that, in the wake of the interest rate decrease in August from 5.25% to 5%, it would proceed cautiously with additional rate reductions.
