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Saturday, Feb 22, 2025

UK set for stronger post-Covid recovery, says OECD

UK set for stronger post-Covid recovery, says OECD

The UK economy's recovery from the pandemic is set to be stronger than previously thought, a leading international agency has suggested.

The Organisation for Economic Co-operation and Development says the UK is likely to grow 7.2% in 2021, up from its March projection of 5.1%.

The OECD raised its forecast for global growth to 5.8%, compared with the 4.2% it predicted in December.

However, it warned that growth would not be shared evenly.

The UK's growth is set to be the fastest among the large rich countries, the OECD says.

UK Chancellor Rishi Sunak attributed the strength of the forecast to the success of the UK's vaccine rollout and the government's Plan for Jobs.

However, he cautioned that with debt at nearly 100% of GDP, there was a need to "ensure public finances remain on a sure footing".

The OECD said prospects for the world economy had brightened, with activity returning to pre-pandemic levels.

However, they remained short of what had previously been expected by the end of 2022.

The OECD praised stimulus measures and swift vaccine rollouts in richer countries for boosting growth, but said the slow jab distribution in many developing countries threatened to blight their economic progress.

It said the recovery would remain uneven and vulnerable to fresh setbacks as long as a large proportion of the world's population were not vaccinated.

Global growth will be led by a strong upturn in the US, where GDP is forecast to reach 6.9% this year, before easing to 3.6% in 2022, the OECD added.

Output in China has also caught up, but emerging-market economies, including India, may continue to have large shortfalls in GDP.


The strong forecast this year for the UK reflects the key role that vaccination plays in supporting economic recovery. It is the fastest growth among the large rich countries - and within the wider G20, it's behind only India and China. But that also reflects the UK rebounding from a downturn that was one of the deepest.

The OECD report gives a flavour of how countries are performing over the course of the health crisis by setting out how long it expects them to take to get back to pre-pandemic levels of economic activity (GDP) per capita. For the UK, it's the middle of next year, along with Italy and Canada.

That's a few months ahead of France and Spain but behind the US, Japan and Germany. It's also behind several emerging economies, including China, which was the first to regain the lost ground.

OECD Secretary-General Angel Gurría said there was an urgent need to "step up the production and equitable distribution of vaccines".

"Effective vaccination programmes in many countries has meant today's economic outlook is more promising than at any time since the start of this devastating pandemic," he said.

"But for millions around the world, getting a jab still remains a distant prospect. We urgently need to step up the production and equitable distribution of vaccines."

OECD chief economist Laurence Boone urged stronger international co-operation between nations to help provide poorer countries with resources to vaccinate their populations.

Income support for people and businesses should continue, but as restrictions ease, these should be "better targeted" where they are needed most, including through retraining and job placement.

The OECD said support also needed to focus on "viable businesses to encourage a move away from debt into equity, and to create jobs and invest in digitalisation".

Foreign trade


Public debt has risen in most economies as a result of the pandemic, but current low interest rates have made servicing the debt manageable.

In the UK, while GDP is predicted to return to pre-pandemic levels next year, the OECD warns that increased border costs following Brexit will hit foreign trade.

Unemployment is also expected to peak at the end of 2021, with a predicted rise to 6.1% when the furlough scheme ends.

It will reach an average of 5.4% in 2021, above 2020 levels of 4.5% and 2019 levels of 3.8%.

The OECD recommends the UK government should maintain support measures until economic recovery is under way, focusing on businesses and sectors with the best growth prospects.

The report also says a closer trade relationship with the EU would improve the economic outlook in the medium term.

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