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The next Economic Survey of the United Kingdom will be prepared for 2011.
An Economic Survey is published every 1½-2 years for each OECD country. Read more about how Surveys are prepared.
The OECD assessment and recommendations on the main economic challenges faced by the United Kingdom are available by clicking on each chapter heading below.
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Chapter 1 Policies to overcome the crisisChapter 1 Policies to overcome the crisis
The United Kingdom, like many OECD economies, is experiencing a severe recession as a consequence of a series of global shocks and any recovery in 2010 is likely to be slow. The financial crisis has severely impaired the supply of credit and house prices have fallen sharply. Unemployment is expected to increase significantly. The large rise in the government deficit is providing support to demand, but the debt-to-GDP ratio will increase substantially. Room for additional fiscal stimulus is therefore limited. Monetary policy has eased and the policy rate has fallen to close to zero. However, the monetary transmission mechanism is impaired and financial conditions while improving somewhat remain restrictive. The Bank of England has begun quantitative easing measures, although these are more likely to be effective within a more transparent framework. Normal functioning of the financial system is necessary for the economy to recover and the authorities have implemented a wide range of measures to support the financial sector. These measures have helped to stabilise the financial system. Given the cyclical rise in unemployment, it will be a significant challenge to ensure that joblessness does not become entrenched, even if the UK labour market is relatively flexible.
Chapter 2 Restoring sound public finances
As in most other OECD countries, the fiscal situation in the UK has deteriorated sharply. While to date the discretionary fiscal stimulus has been relatively modest, after around the turn of the century the underlying fiscal position weakened more than anticipated. While there was some subsequent improvement, particularly in tax receipts, the severe impact of the downturn on the public finances and the borrowing related to the rescue of the financial sector will take public debt to levels in line with or even exceeding other European economies. The government has set out a commitment to bring the cyclically-adjusted current budget back in balance and ensure debt is falling as a proportion of GDP once the economy is recovering, and has announced fiscal consolidation plans worth over £50 billion. The government needs to ensure it delivers on its commitment to implement a sustained consolidation. While the Code of Fiscal Stability provides the foundations for a sound fiscal framework the government should consider reformulating the fiscal rules once uncertainties have reduced. Any reformulation should provide for expenditure discipline, and be forward looking. The current temporary operating rule that was put in place with the suspension of the fiscal rules in the November 2008 PBR is forward looking in this way.
Chapter 3 The NHS: an economic health check
The government’s health reform programme since 2000 has covered many aspects of the organisation of health care and was accompanied by a sizeable increase in spending on healthcare. Many of these reforms have the potential to improve the efficiency and responsiveness of the health care system and ultimately health outcomes. This chapter provides an overview of the organisation and financing of the National Health Service, reviews its performance, assesses the reforms since the start of the decade and provides recommendations for further development.
Chapter 4 Financial stability: banking on prudence
The UK financial market has been severely affected by the financial market crisis. The crisis has exposed weaknesses in the supervisory framework as well as that for crisis management and resolution. This chapter reviews the supervisory and regulatory framework and the many reforms that have already been adopted to remedy these weaknesses. It also provides recommendations for further reforms.
Chapter 5 Structural policies to promote sustainable long-term growth
While the immediate imperative is to tackle the financial crisis and to steer the economy through the current downturn, there are also a number of longer-term challenges that need to be addressed to foster a robust and sustainable recovery. In particular assistance for young and low skilled workers needs to be enhanced and the performance of the education sector also needs to be improved.
How to obtain this publication
The complete edition of the Economic Survey of the United Kingdom is available from:
The Policy Brief (pdf format) can be downloaded in English. It contains the OECD assessment and recommendations.
For further information please contact the United Kingdom Desk at the OECD Economics Department at email@example.com.
The OECD Secretariat’s report was prepared by Petar Vujanovic, Sebastian Barnes, Philip Davis and Peter Smith under the supervision of Peter Hoeller. Statistical assistance was provided by Joseph Chien.
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