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OECD raises UK growth forecast citing forceful BOE stimulus

Tuesday, March 7, 2017 - 19:12

[PARIS] The OECD revised up its forecast for UK growth for the second time as the economy proves unexpectedly resilient in the face of Britain's vote to leave the European Union.

The Paris-based Organization for Economic Cooperation and Development increased its 2017 growth projection to 1.6 per cent from 1.2 per cent, citing the success of Bank of England stimulus and an easing of fiscal austerity in the wake of the Brexit vote.

The UK's economic fortitude after June's shock referendum result has so far belied warnings from bodies including the OECD, International Monetary Fund and World Bank and led some pro-Brexit campaigners to criticise their initial forecasts as scaremongering.

"We have to remember the extent to which there was an explicit very forceful policy response by the Bank of England and a change in fiscal stance by the government," said OECD Chief Economist Catherine Mann.

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"We have revised up the UK a lot - look how effective monetary and fiscal policy were."

Even so, the OECD left its 2018 growth prediction unchanged at one per cent.

It said rising inflation looks set to weigh on consumers and business investment will slow amid uncertainty about Britain's trading relationship with the EU after Brexit.

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