Page last updated at 15:34 GMT, Thursday, 3 September 2009 16:34 UK

UK 'will miss start of recovery'

Car production line Germany
The OECD says the German economy will lead growth in the eurozone

The global economy may recover earlier than first thought, the Organisation for Economic Co-operation and Development (OECD) has said.

But it said the UK economy would shrink by 4.7% this year, compared with its earlier forecast of a 4.3% contraction.

That is also worse than the 3.5% decline the UK Treasury has predicted.

The OECD expects both the US and the eurozone to exit recession in the third quarter, saying developments in recent months had been "mostly favourable".

The BBC's economics editor, Stephanie Flanders, said the new forecast for the UK was due to revised estimates of growth from previous quarters.

"The fall in the growth figure for 2009 is entirely driven by revisions to fourth-quarter 2008 and first-quarter 2009 which the Office for National Statistics has made since June.

"The OECD's forecasts for the UK in the third and fourth quarters of 2009 are, in fact, slightly better than before," she said.

Rapid change

Despite its upbeat assessment of the US and eurozone economies, the OECD warned that "headwinds" such as high unemployment and house price falls meant the recovery was ''likely to be modest for some time to come''.

The OECD's latest assessment comes on the eve of a meeting of finance ministers from the G20 group in London.

Its forecast sees the US economy growing at an annual pace of 1.6% in the third quarter, while the eurozone is expected to expand by 0.3%.

"Compared with expectations a few months ago, we now have a recovery which... may be coming a little earlier and it may be slightly stronger because financial conditions have improved more rapidly than we assumed a few months ago," OECD chief economist Jorgen Elmeskov said.



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