Influential think-tank the Organisation for Economic Co-operation and Development (OECD) has today reduced its forecast for UK economic growth this year from 1.7 per cent to 1.5 per cent.
The international group backed the government’s attempts to cut the national deficit but said more had to be done to boost growth this year.
Smaller-than-planned public investment cuts would help the economy and job creation, the OECD said, with improvements in the UK’s tax system potentially funding this.
“By taking hard, though necessary, decisions now, the UK is ensuring that it can continue to provide the British people with effective government services in the future,” OECD Secretary-General Angel Gurría said.
“To counter some of the negative impact, monetary policy should remain expansionary to support the recovery, even if headline inflation is currently above target.”
Next week the Chancellor, George Osborne, will unveil the government’s Spring Budget, with many retailers calling on him to reduce red tape and tax burdens to increase growth.
Unemployment rose to a 17-year high yesterday, according to figures released by the Office for National Statistics but many believe a healthy retail sector can help soak up many of the planned job losses from the public sector.
Gurría pointed out today the UK tax system is one of the least efficient of any rich country, with less than 60 per cent of potential revenues actually collected, and advised the government to address this.
Early this month Stephen Robertson, Director General of the British Retail Consortium, criticised the Northern Irish Budget statement which suggested that retailers could shoulder more of the tax burden.
Robertson said: “Retailers already pay the highest proportion of business rates of any sector. There’s no rationale for singling out retail ahead of other sectors such as banking or business services.
“Retailers are planning growth across the UK, investing in town centres and employing an increasing number of people.”