America’s economy is set to grow three times as fast as the UK’s this year as both countries go to the polls to elect a new leader, senior economists forecast on Monday.
The Organisation for Economic Co-operation and Development predicted the US economy will expand by 2.1 per cent in 2024, an upgrade of 0.6 percentage points on its November forecast, while Britain will see growth of 0.7 per cent, an unchanged figure.
The OECD’s latest report laid bare the economic background for the US election, where Joe Biden appears set to face Donald Trump with solid growth.
Despite this, a few new polls put Mr Trump ahead of Mr Biden, with at least one of them finding a wide margin in favour of the Republican billionaire as who would be best for the economy.
In Britain, Rishi Sunak is battling to avoid a defeat to Sir Keir Starmer, with the country continuing to be marooned in low growth, with the blows from Vladimir Putin’s war in Ukraine, Brexit and the Covid pandemic.
The UK will grow at more than double the rate of Germany, whose forecast has been cut from 0.6 per cent to 0.3 per cent, marginally better than France on 0.6 per cent, the same as Italy on 0.7 per cent, and at half the rate of Spain on 1.5 per cent.
The OECD’s Economic Outlook Interim Report says: “Growth in the euro area is expected to remain soft through the first half of 2024 before steadily recovering as real incomes strengthen: average annual growth rates are projected to be 0.6% in 2024 and 1.3% in 2025, after 0.5% in 2023.
“The United Kingdom has a similar profile, with growth picking up from 0.3% in 2023 to 0.7% in 2024 and 1.2% in 2025.”
The study by the Paris-based economic think tank also warned of the possibility of more falls in house prices given the low number of transactions in several G20 countries.
“The impact of monetary policy tightening also remains apparent in housing markets,” it said.
“Structural factors, including strong population growth and a limited stock of houses for sale, have resulted in house prices stabilising in a number of countries where price declines initially followed policy and mortgage rate rises.
“However, the volume of transactions has continued to drop markedly, suggesting that a renewed decline in prices is possible if more owners are forced to sell.”
The report also warned countries faced “mounting fiscal challenges” from bringing down their debt mountains and of the “high geopolitical tensions” posing a “significant near-term risk to activity and inflation,” including the Red Sea clashes.
