The British government need to increase its efforts to aid infrastructure projects in a bid to help the UK’s economic growth according to the OECD (Organisation for Economic Cooperation Development).
The OECD forecasts the economic development of many of the countries that belong to the EU, providing them with an economic outlook. They lowered their 2013 growth predictions from 0.9 per cent to 0.8 per cent and also lowered their 2014 prediction by 0.1 per cent to 1.5 per cent. It said that the UK economy still faced strong headwinds from a recession plagued Eurozone and that slow income growth was also a worry.
The OECD said in its report that investing more in infrastructure would enhance growth prospects for the UK. This recommendation comes just days after the IMF recommended that the country should borrow as much as £10billion to invest in infrastructure spending and business tax cuts to bolster the recovery.
The OECD also noted the current doubts of how effective quantitative easing had been; the Bank of England has so far injected an extra £375billion into the UK economy. It recommended that the banks were given greater flexibility to adjust “adjust its monetary stance to economic developments” and meet its 2 per cent inflation target.
There should be a steady improvement in the economy according to the OECD in 2014 despite downgrading the growth expectations. David Kern, from the OECD said that “While the economy should see stronger growth in 2014, it is notable that the OECD has downgraded its predictions for this year. It provides a glaring reminder that the growing optimism in the financial markets, with soaring share prices in many centres, is not yet reflected in the real economy.”