The UK economy is forecast to grow by 2.6 percent in 2014 according to the Organisation for Economic Cooperation and Development. But as Ivor Bennett reports, concerns remain over the sustainability of the recovery as Britain's oil and gas industry reported its biggest loss since the 1970s.
The hustle and bustle of London, and the sound of economic success. The UK economy is the fastest growing in the G7 with growth forecast to hit 2.6 percent this year. That's the assessment from the OECD. But despite the creation of 3 million jobs in the last 5 years, the UK's not in the clear yet, says Secretary General Angel Gurria. SOUNDBTIE (English) ANGEL GURRIA, SECRETARY GENERAL, OECD, SAYING: "We have been waiting for those indicators to start signalling that real wages could actually turn and start rising. Not only the number of the jobs but the quality of the jobs and its seems to be moderately happening. We can't be triumphant about it but it's hopeful." Productivity is apparently the problem. It's been languishing since 2007 and the OECD says it's holding back real wages. Low interest rates and falling oil prices have got people spending in the meantime. But maybe not for long, says ETX Capital's Joe Rundle. (SOUNDBITE) (English) ETX CAPITAL, HEAD TRADER, JOE RUNDLE, SAYING: "A loss of confidence for the UK economy would be critical, and I think that's one of the main reasons that the Bank of England has been breathing a sigh of relief about this oil fall-off - because it will put pressure on inflation and make it less likely to raise interest rates. And I think that will just give the wages increases a chance to build up steam, and the recovery to become less dependent on investor confidence and more dependent on the actual real economic recovery." For oil and gas though, these are worrying times. The falling prices saw the industry suffer its biggest loss last year since the 1970s. With rising costs contributing to negative cash flow of over 5 billion pounds. Mike Tholen from Oil and Gas UK. SOUNDBITE (English) MIKE THOLEN, ECONOMICS DIRECTOR, OIL AND GAS UK, SAYING: "The questions though is the outlook for investment, which is much more of a concern now than it has been. We're seeing investment fall at about 3-4 billion pounds a year. And the concern is, unless we do something to solve that now, then the industry will be in a very difficult position very quickly." The government has promised new measures to help the industry in next month's budget. The bigger worry though could be keeping voters happy with the general election barely 2 months away. The austerity measures got the sign-off from the OECD. But on the campaign trail they may prove a harder sell.