MercoPress. South Atlantic News Agency

OECD votes for PM Brown and fourth Labour term

Chancellor Alistair Darling hailed the OECD forecast as a “vindication”

Prime Minister Gordon Brown’s bid for a fourth Labour term received a boost this week with a forecast that the UK would pull out of recession faster than many major international rivals.

The Organisation for Economic Co-operation and Development (OECD) predicted annualised growth of 2% for the UK during the first three months of 2010 - behind Canada, the United States and France but ahead of Germany, Japan and Italy.

Chancellor Alistair Darling hailed the forecast as a “vindication” of the Government’s decision to borrow large sums to support the economy during the recession. And he highlighted an OECD warning against removing support measures too soon, which he said exposed as ‘reckless’ Conservative plans for swift reductions in the state deficit.

Official output estimates for the first three months of 2010 are due two weeks before the May 6 General Election - and would add momentum to Labour’s campaign if they confirmed continuing growth in the economy.

OECD forecast said the UK’s expected annual growth of 3.1% would only be exceeded by the Canadian economy during the second quarter of the year. But the organisation also stressed the uncertain state of the recovery and urged “caution” in the removal of state support for the economy.

“Despite some encouraging signs on activity, the fragility of the recovery, a frail labour market and possible headwinds coming from financial markets underscore the need for caution in the removal of policy support,” its report said.

Mr Darling said: “The OECD report today is a vindication of the approach that the Labour Government is taking.

“We are coming through this deep global recession because of the actions we took to support the economy. Along with the governments of every major economy, we rejected the Tory call to do nothing to help during the recession.

“The OECD says that we have set the country on the course for faster growth in the coming months - but only if we don’t cut support too soon. They advise governments not to take the recovery for granted and pay attention to ‘the need for caution in the removal of policy support’.

“The Tories would do well to heed yet another independent warning about how reckless their approach is. In short: don’t-cut-support too soon or you’ll wreck the recovery.”

The latest survey from the British Chambers of Commerce (BCC) said the UK avoided a dreaded “double-dip” recession in the first quarter, but warned “serious risks of a setback remain”. BCC also highlighted the “fragile” nature of the recovery and said manufacturers were lagging behind, while the Chartered Institute of Purchasing and Supply (CIPS) reported slowing growth among services firms.

BCC said services firms - the main driver of the economy - saw orders and sales growth in the first quarter, while CIPS reported the first jobs growth in the sector since April 2008, despite easing growth.

The figures follow the CIPS construction survey yesterday which signalled the first growth in the beleaguered industry for more than two years last month.
The OECD report came as revised figures showed economic growth among the 16 countries using the Euro stagnating during the fourth quarter of 2009. Previous estimates by the statistics organisation Eurostat had shown the Euro zone economies expanding by a modest 0.1% in the quarter.

The Euro area has been beset with economic worries in recent weeks as question marks hang over member nations with precarious finances such as stricken Greece, which has needed strong support for a draconian austerity program.