The Organisation for Economic Co-operation and Development has said the UK economy will return to growth in the second half of this year with recovery threatened by a potential global slowdown. In its economic outlook the OECD said the UK economy will remain weak in the first half of 2012 but will regain momentum in the second half, as slowing inflation eases pressure on household incomes and exports and investments revive. The OECD forecasts the UK economy to expand 0.5% in 2012 and predicts output to increase 1.9% in 2013, up from a previous prediction of 1.8%. The OECD said, “Growth will remain weak in the first half of 2012, but should gain momentum thereafter, with private consumption supported by higher real incomes, as inflation slows and exports and business investment revive with stronger external demand.” However, they did say that Britain’s economy faces a number of risks as a weaker global economy could damage exports and higher oil prices would hurt consumption.

The OECD said, “Fiscal consolidation is a drag on growth,” adding, “However, fiscal policy remains heavily constrained. The ambitious government plan to restore fiscal sustainability remains on track and appropriate despite disappointing economic growth.” The OECD took a more neutral take on the Bank of England’s policy than its previous outlook which called for more quantitative easing. “With the policy rate at 0.5% and quantitative easing at £325 billion since February 2012, monetary policy is appropriately providing strong support to the economy.”