The Organisation for Economic Co-operation and Development has revised its growth projection for the United Kingdom upward for the second time this year, lifting its full-year estimate from 0.8 per cent to 1.0 per cent. The upgrade, contained in the Paris-based body’s interim Economic Outlook published on Monday, places Britain among the more resilient advanced economies in a global landscape still marked by trade uncertainty and geopolitical tension.
The OECD’s chief economist attributed the revision to “a combination of firmer-than-expected household consumption, a supportive labour market, and the early dividends of the government’s industrial strategy.” Consumer spending, which accounts for roughly two-thirds of UK economic activity, has held up better than forecasters anticipated, despite the lingering effects of elevated mortgage rates and a cost-of-living squeeze that has persisted, in varying degrees, since 2022.
Retail sales volumes rose by 1.2 per cent in the second quarter, with particularly strong performances in clothing, household goods and leisure services. The hospitality sector, buoyed by a warm summer and the communal viewing culture surrounding the World Cup, reported its best trading period since the pre-pandemic era. Online retail, meanwhile, continued its structural expansion, though at a more moderate pace than during the lockdown years.
The labour market remains tight by historical standards. The unemployment rate stands at 4.1 per cent, well below the long-run average, and wage growth, while easing from its post-pandemic peaks, continues to outpace inflation in real terms. The OECD noted that employment among workers aged 50 to 64 has risen for the fourth consecutive quarter, reversing a worrying trend of early retirements that had concerned policymakers since 2021.
The report was broadly welcomed in Whitehall. A Treasury spokesperson described the upgrade as “further evidence that the government’s economic plan is working,” while emphasising that the Chancellor remained focused on “the structural reforms needed to raise productivity and secure sustainable growth over the medium term.” The Opposition, predictably, struck a more sceptical note, arguing that a 1.0 per cent growth rate was “hardly cause for celebration” and that the OECD’s forecast remained below the government’s own long-term ambition.
