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2003 OECD Economic Outlook, Volume 2003 Issue 2

image of OECD Economic Outlook, Volume 2003 Issue 2

This issue of the OECD Economic Outlook analyses the major trends that will mark the next two years. It  covers the outlook to the end of 2005 and examines the economic policies required to foster high and sustainable growth in member countries. Developments in selected major non-OECD economies are also evaluated. Three analytical chapters look at fiscal policy and its influence on economic activity, fiscal relations across levels of government, and  crubing the growth in government spending and raising its  cost effectiveness.

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United Kingdom

The UK economy continues to exhibit greater resilience than most other OECD countries. Growth, led by private and public consumption, has remained close to potential, while inflation and unemployment are internationally low. The recent pick-up in activity should lead to above trend growth in 2004-05, with a more balanced expenditure composition, providing instability stemming from the housing market can be avoided. A gradual continuation of the recent tightening of monetary policy will be needed to ensure consistency with the inflation target and would also reduce the risk of another surge in house prices. The public sector deficit has widened considerably and, though arguably still consistent with the “golden rule”, may call for a slowdown in spending or a rise in taxes during the current upswing to avoid a destabilising adjustment later on...

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