OECD figures point to a UK contraction

Tim Wallace
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MOST developed economies will slow further in the coming months, the Organisation for Economic Cooperation and Development (OECD) warned yesterday.

Only Japan, the US and Russia are showing positive signs, the body’s leading indicators suggest.

In November the UK’s index -- which aims to predict economic turning points six months in advance -- slowed 0.4 points to 98.4. A score of 100 represents the country’s trend rate of economic growth.

“These figures maintain serious concerns that the economy is headed back into recession,” said Howard Archer from IHS Global Insight.

The UK economy grew just 0.1 per cent in the three months to December, according to separate estimates by the National Institute for Economic and Social Research, also released yesterday.

Italy’s OECD leading index score of 95.8, down 0.5 on October’s score and eight points on November 2010, leads the slowdown in the Eurozone.

As a whole, the currency area’s leading index fell 0.4 points in the month and 5.6 in the year to 98.3 – its weakest outlook since August 2010.

Data also suggest India and Brazil’s economies are slowing sharply.

The US’s index now stands at 101.2 and China’s at 100.0 – suggesting on or just above trend rate growth.

The indicator uses business sentiment, consumer confidence and job expectations to estimate economic growth in six months’ time.