Wednesday, February 25, 2015

United Kingdom: the double reading of the OECD satisfecit – The

United Kingdom: the double reading of the OECD satisfecit – The

A few months before general elections (scheduled on May 7), David Cameron will retain only the essence of an OECD study. the organization issued an economic assessment of the good report of the British Prime Minister. Indeed, with 2.6% growth, the UK recorded the best performance among the G7 countries and the Organisation for Economic Cooperation and Development estimates that “long-term foundations for growth have been asked. “

” You have divided by half the deficit, which remains high compared to other OECD countries, but you soon the beginning the most difficult part, which means that fiscal consolidation will be able to continue at a pace that will not weigh on growth, “said Angel Gurria, Secretary General of the OECD, to the address of George Osborne, Chancellor of the Exchequer, to whom he submitted his report

To this, he added. “Well done the chancellor, and now we have finish the job! “. For the OECD report is not as laudatory as it looks. The organization points to a number of concerns, not least, and do not fail to emphasize them.

The dangerous decline in productivity

The low productivity is a real problem the strength of UK growth. According to the agency, labor productivity remained “exceptionally low since the beginning of the crisis,” in contrast to previous crises reversals phases were accompanied by a strong recovery this variable. The OECD notes and productivity has not increased since 2008, the beginning of the economic crisis.

The institution considers that the low level of investment (16% of GDP against 22% in France) was favored by the strong “flexible” labor market. Zero hours contracts, and the excessive use of association of autoentrepreneurs, allowed to substitute labor for capital.

Inequalities are higher than elsewhere …

The OECD also notes that the labor market is highly precarious because of this high flexibility. It also notes that the decline in real wages (uninterrupted between 2008 and 2014) has contributed to widening social inequalities in the UK. A region where they are higher than in other European countries.

Finally, the body suggests that the Government revive infrastructure investment but also in education and research and development to promote recovery in productivity.

In early February, the OECD published a report in which it feared a downturn in the UK economy. The organization found that its advanced of the British economy indicators were down for the fifth consecutive month.


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