OECD: Recession 'could be over by August'

By DAILY MAIL REPORTER
Updated: 04:47 EST, 12 May 2009

The recession may be over in Britain by August, international experts said yesterday.

Green shoots: Yet more positive signs.

A report from the influential Organisation for Economic Cooperation and Development said output was still shrinking but there were clear signs of recovery.

Its predictions were backed up by a range of figures on the economy.

Surveyors reported signs of strong recovery in the housing market, while retailers said consumer spending picked up last month.

A quick recovery would fly in the face of gloomy forecasts by the International Monetary Fund only a few months ago. It said Britain was likely to suffer the deepest recession of any leading economy - although it has since said that other countries are likely to fare even worse.

Yesterday the Royal Institution of Chartered Surveyors (Rics) said there was a big surge in the number of people wanting to buy a home in April - the sixth monthly rise in a row. The turnaround has been particularly strong in London.

• Shares: What next?

The Rics said house prices are still falling, but the picture is better than it has been since the beginning of last year.

There is still a problem, however, with the reluctance of owners to put their houses up for sale, which the Rics suggested may be linked with a change in the rules governing Home Information Packs.

The upbeat message echoes comments by Lloyds Banking Group at the weekend that it was seeing the biggest number of buying inquiries for more than six years.

Figures on consumer spending show total April sales were 6.3% higher than last year. The British Retail Consortium (BRC) said takings were boosted by the timing of the Easter holiday and much sunnier weather than in April 2008.

Cautious: BRC boss Stephen Robertson

But Stephen Robertson, head of the BRC, warned: 'With unemployment set to grow through the rest of the year, mounting jobs worries will hold back spending for some time. We shouldn't celebrate yet.'

The OECD report is based on the performance of its index of leading indicators in March. They measure a range of data, including trends in stock markets and business surveys, to pick up signals of how economies will perform over the next six months.

The organisation said Britain, France and Italy were all 'showing tentative signs of a pause in the economic slowdown,' while China may have started to recover.

Studies by the Bank of England suggest that cuts in interest rates and the policy of pumping cash into the economy have made it easier for companies and individuals to borrow.

But its quarterly Inflation Report tomorrow is expected to say that the economy will shrink this year by more than the 3.5% forecast by Chancellor Alistair Darling in the budget. The Bank is likely to say, however, that once recovery gets under way the economy will grow strongly.

Brief view from OECD Secretary-General Angel Gurria

Desperate workers take part-time roles

• More than 800,000 people are working part-time because they cannot find full-time jobs, research has revealed.

Pay fears: Brendan Barber

With unemployment set to show another huge rise today, the TUC said the number of 'involuntary' part time workers had increased sharply over two years. The current figure of 829,000 is the highest since 1994.

TUC general secretary Brendan Barber said: 'As unemployment rises, people are doing whatever they can to stay in work. But while part-time work is better than no work at all, people will be shocked by the pitiful pay rates on offer.'

Warning that the jobless total is on course to hit 2.5m by the summer, he said tackling unemployment was 'the only way to get our economy motoring again.'