2 min read

OECD: Britain to enjoy strong growth for generations! Honestly!

We're so used to hearing bad news from international institutions like the Organisation for Economic Co-operation and Development that it might come as a surprise to hear that there's a whopping slab of good news for Britain buried away in its latest Economic Outlook.

Admittedly, the good news is tucked away in one of the more obscure tables near the back of the report, and comes alongside some more noticeable bad news. But we must cherish these moments when they come – and this news is genuinely encouraging.

It's as follows: after this crisis is through, from 2018 to 2030, Britain can enjoy stronger growth than almost any other major economy. At 2.6% the average predicted growth rate is even stronger than the United States (2.1%) and far, far stronger than Germany (0.9%). Britain's advantage will remain in place between 2031 and 2060 as well, at average growth of 2% (US: 1.7%, Germany: 0.7%).

The figures, which form part of a section on long-term growth statistics from the OECD's latest survey of the world economy, are striking, suggesting as they do that Britain is destined for generations of punchy growth. What is the explanation?

In part, it's demographic: Britain's population trends are far less worrying than those you see in Germany. In part, it's a sign of the long-term benefits of the Thatcherite supply side reforms of the 1980s. As far as the OECD is concerned there is little Britain can actually do in terms of extra growth-boosting supply side reforms (things like deregulating the labour market, privatising industries): because it has already done so many of them.

As I said, of course it's not all good news. Britain has more work to do on reducing the size of its public debt than any other major country in the world (except for Japan). That will be a painful process, and indeed the overall OECD report today isn't exactly encouraging, forecasting weak growth in the near term for Britain.

But the silver lining is that the pain may just be worth it. According to the OECD's projections, growth will be stronger than the US for decades after that. Oh, and that goes for employment growth and productivity too.

 

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