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2005 OECD Economic Outlook, Volume 2005 Issue 2

image of OECD Economic Outlook, Volume 2005 Issue 2
Twice a year, the OECD Economic Outlook analyses the major trends and examines the economic policies required to foster high and sustainable growth in member countries. Developments in major non-OECD economies are also evaluated. The present issue covers the outlook to end-2007. Together with a wide range of cross-country statistics, the Outlook provides a unique tool to keep abreast of world economic developments.  In addition to the themes featured regularly, this issue contains an analytical chapter addressing the recent run-up in house prices.

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United Kingdom

Growth has slowed sharply, largely due to weaker consumption related to the ending of the house price boom. But strengthening investment and exports should lift growth from below 2% this year to 2½ per cent in 2006 and 2¾ per cent in 2007.

The government deficit exceeded 3% of GDP in 2004. If fiscal developments disappoint relative to the 2005 Budget projections, beyond what can be explained by weaker-than-expected growth, then the Government will need to take further measures to achieve a decisive reduction in the deficit. With inflation having surprised on the upside and the prospect of a gradual return towards trend growth early next year, there is currently no compelling case for a further cut in interest rates. To raise potential growth a priority is to roll out nationally the reform of the disability scheme, while taking measures over the longer term to improve workforce skills.

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