OECD head praises UK growth

The secretary general of the Organization for Economic Cooperation and Development (OECD) Angel Gurria Tuesday said that growth in the British economy was the fastest among G7 nations in 2014, but labor productivity was lackluster and was holding back living standards.

Gurria told journalists at a press conference in the British Treasury to launch the 'OECD Economic Survey of the UK': "Growth is 2.6 percent for 2014, the strongest among G7 countries. The performance of the labor market has been remarkable, private sector employment has increased by 3 million since 2010. In relative terms you have done better than the US."

The UK employment rate was at record levels and unemployment rate had fallen to 5.6 percent, and as unemployment had fallen inflationary pressures had vanished, and real wages were on the rise, he said.

"The UK is fast becoming a textbook case of best practice how good labor market and good product market reform can support growth and job creation. My main message is well done, so far, but finish the job," said Gurria.

"We are predicting this economic expansion will continue this year and the next," he added.

Gurria said the budget deficit was "still high compared to other OECD countries and therefore fiscal consolidation has to continue."

The report showed labor productivity in 2013 just below the levels of 2007, and Gurria highlighted this.

He said: "The biggest single challenge for the UK is to make work more productive. Productivity in the UK did not revive during the recovery. Labor productivity has been weak, compared with other countries which have also enjoyed solid job creation since 2010 such as Canada and the United States, and reviving productivity is vital to maintaining high growth and boost competitiveness."

British chancellor of the exchequer George Osborne said: "This year's economic survey confirms we have the right overall economic strategy and that the UK has made significant progress over the last five years."

Osborne said the budget deficit had been reduced from 10 percent of national income in 2010, the highest of any major economy, to five percent now.

"Today's report recognizes the significant progress we have made in reducing our deficit. But it is still too high, we need to eliminate the deficit. The OECD says clearly we must stick to our fiscal consolidation plans if we want to secure the economic recovery and avoid risks to stability," said Osborne.

Osborne said he agreed with recommendations in the report of areas that needed improvement including: strengthening the supply side of the economy across education and skills; the take-up of research; land use and planning and access for finance to young firms to improve productivity. Endit