UK joins US as economic growth engine of world

Tim Wallace
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The UK’s services industry is expected to drive further growth during this year
Britain and the US are set to grow strongly, the World Bank said last night, defying the malaise which is overtaking the Eurozone and much of the developing world.

Crashing oil prices should give those economies a cushion, which the analysts said should be used for crucial economic reforms to restore competitiveness and growth.

Economists slashed forecasts for the Eurozone to 1.1 per cent for 2015 – just six months ago, the World Bank thought the currency area would grow by 1.8 per cent this year.

And the chopped global growth forecasts from 3.4 per cent to three per cent for 2015, and from 3.5 per cent to 3.3 per cent for next year.

By contrast the US outperformed forecasts for last year, with growth of 2.4 per cent rather than the expected 2.1 per cent.

And the World Bank pushed up its forecast for US growth in 2015 from three per cent to 3.2 per cent.

Britain is closer to the US. The economists expect the UK will rack up growth of 2.9 per cent in 2015 and 2.6 per cent next year.

The one bright spot for those struggling regions is the fall in oil prices.

“The lower oil price, which is expected to persist through 2015, is lowering inflation worldwide and is likely to delay interest rate hikes in rich countries,” said

“This creates a window of opportunity for oil-importing countries, such as China and India. What is critical is for nations to use this window to usher in fiscal and structural reforms, which can boost long-run growth and inclusive development.”

Eurozone leaders have pledged to make reforms to make their economies more flexible and competitive, but they have often proved difficult to implement politically.

An extra boost from low oil prices could help politicians implement these reforms, by easing some of the pressures on living standards and growth which have come from high fuel prices.

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