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The OECD hammers UK hopes of recovery

The Organisation for Economic Co-operation and Development (OECD) has this evening stuck the knife into the UK government with a downward revision of its forecast for the UK economy in 2009. At a time when the UK economy has seen more upbeat statements over the last couple of weeks than over the last 18 months it seems as though the OECD does not believe the recession is over as yet.

Previously the organisation had forecast that the UK economy would contract by 3.7% in 2009 but today this figure has been revised down to 4.3%. While the 0% forecast growth for the economy in 2010 remains unchanged, at this point in time, there is potential scope for further downward revision amid concerns that the UK budget deficit is spiralling out of control. The OECD predicts the total UK budget deficit in 2010 will be a massive 14% and has substantial concerns about the ongoing financial strength of the UK economy as a whole.

There is no doubt that the ever-growing deficit will at some stage impact upon the rate of recovery by the UK economy as tax increases will need to be instigated as soon as possible. The OECD has for some time been very downbeat on the prospects for the UK economy even when more and more economic forecasters are coming around to the potential for recovery.

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