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The UK remains at risk from “lingering” inflation but its economy is among nations showing “robust” growth, according to a biannual report which upgrades its expectations for output both this year and next.

The Organisation for Economic Co-operation and Development (OECD) saw UK gross domestic product (GDP) rising by 1.1% this year – faster than the euro area combined.

That compared to a figure of just 0.4% it had forecast for 2024 back in May.

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It marked one of the biggest upgrades to forecasts among the Paris-based club’s 38 member states.

Its predictions, the OECD cautioned, continued to be at the mercy of world events following a succession of shocks in recent years from COVID, Russia’s invasion of Ukraine and the conflict in the Middle East.

The UK upgrade largely reflected the better-than-expected performance seen during the first six months of the year when the country exited the recession of the second half of 2023.

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The downturn was widely blamed by economists on the impact of Bank of England interest rate hikes to bring down inflation.

In its update, the OECD said a high pace of wage growth, while moderating, remained a threat to the UK inflation outlook.

It also pointed to continued pressure from services price inflation.

The findings chimed with recent commentary from the Bank of England that it would take a cautious approach to further interest rate cuts, following the shift to 5% from 5.25% seen in August.

The OECD suggested UK growth would accelerate mildly to 1.2% during 2025 – a timeframe ahead that is currently shrouded in mystery as the new Labour government is yet to outline its first budget, due on 30 October.

Chancellor Rachel Reeves has promised a focus on bolstering growth.

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She said of the report’s findings: “Faster economic growth figures are welcomed, but I know there is more to do and that is why economic growth is the number one mission of this government.

“Next month’s budget will be about fixing the foundations, so we can deliver on the promise of change and rebuild Britain.”

The OECD forecasts showed a further downgrade for Europe’s largest economy, Germany, which was seen as growing by only 0.1% this year.

Its anticipated performance, largely a consequence of an uncompetitive manufacturing base during a time of slowdown in China, has proved a drag on the wider euro area’s GDP forecast.

That stood at an unrevised 0.7%.

The European Central Bank is expected to act twice more this year to cut borrowing costs in a bid to bolster flagging activity.

Its US counterpart cut its target range for the first time since 2020 last week amid worries over a hiring downturn.

The OECD said it still expected US GDP growth to slow to a rate of 2.6% this year – cushioned by further monetary policy easing as inflation came under control.

The report predicts: “Significant risks remain. Persisting geopolitical and trade tensions could increasingly damage investment and raise import prices.

“Growth could slow more sharply than expected as labour markets cool, and deviations from the expected smooth disinflation path could trigger disruptions in financial markets.

“On the upside, the recovery in real incomes could provide a stronger boost to consumer confidence and spending, and further oil price declines would hasten disinflation.”

It added: “Decisive fiscal actions are needed to ensure debt sustainability, preserve room for governments to react to future shocks and generate resources to help meet future spending pressures. Stronger efforts to contain spending and enhance revenues, set within credible medium-term adjustment paths, are key to ensuring that debt burdens stabilise.”

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Water companies blocked from using customer cash for ‘undeserved’ bonuses

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Water companies blocked from using customer cash for 'undeserved' bonuses

Nine water companies have been blocked from using customer money to fund “undeserved” bonuses by the industry’s regulator.

Ofwat said it had stepped in to use its new powers over water firms that cannot show that bonuses are sufficiently linked to performance.

The blocked payouts amount to 73% of the total executive awards proposed across the industry.

The regulator has prevented crisis-hit Thames Water, Yorkshire Water, and Dwr Cymru Welsh Water from paying £1.5m in bonuses from cash generated from customer bills.

It said a further six firms have voluntarily decided not to push the cost of executive bonuses worth a combined £5.2m on to customers.

Instead, shareholders at Anglian Water, Severn Trent, South West, Southern Water, United Utilities and Wessex will pay the cost.

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David Black, chief executive of Ofwat, said: “In stopping customers from paying for undeserved bonuses that do not properly reflect performance, we are looking to sharpen executive mindsets and push companies to improve their performance and culture of accountability.

“While we are starting to see companies take some positive steps, they need to do more to rebuild public trust.”

The announcement came in an Ofwat update on firms’ financial resilience and bonuses.

Industry lobby group Water UK said: “Almost all water company bonuses are already paid by shareholders, not customers.

“All companies recognise the need to do more to deliver on their plans to support economic growth, build more homes, secure our water supplies and end sewage entering our rivers.

“We now need the regulator Ofwat to fully approve water companies’ £108bn investment plans so that we can get on with it.

“Ofwat’s financial resilience report provides yet more evidence that the current system isn’t working, with returns down to 2% and eight companies making a loss.

“It is clear we need a faster and simpler system which allows companies to deliver for customers, the environment and the country.”

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Google could be forced to sell its Chrome browser over internet search monopoly claims

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Google could be forced to sell its Chrome browser over internet search monopoly claims

Google must sell its Chrome browser to restore competition in the online search market, US prosecutors have argued.

The proposed breakup has been floated in a 23-page document filed by the US Justice Department.

It also calls for lawmakers to impose restrictions designed to prevent its Android smartphone software from favouring its own search engine.

If the rules were brought in, it would essentially result in Google being highly regulated for 10 years.

Google controls about 90% of the online search market and 95% on smartphones.

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Court papers filed on Wednesday expand on an earlier outline for what prosecutors argued would dilute that monopoly.

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Google called the proposals radical at the time, saying they would harm US consumers and businesses and shake American competitiveness in AI.

The company has said it will appeal.

The US Department of Justice (DoJ) and a coalition of states want US District Judge Amit Mehta to end exclusive agreements in which Google pays billions of dollars annually to Apple and other device vendors to be the default search engine on their tablets and smartphones.

Google will have a chance to present its own proposals in December.

A trial on the proposals has been set for April, however President-elect Donald Trump and the DoJ’s next antitrust head could step in.

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Dozens of partners take early retirement from accountancy giant PwC

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Dozens of partners take early retirement from accountancy giant PwC

Dozens of partners at PricewaterhouseCoopers (PwC), Britain’s biggest accountancy firm, will next month take early retirement as its new boss takes steps to boost its performance.

Sky News has learnt that PwC’s 1,030 UK partners were notified earlier this week that a larger-than-usual round of partner retirements would take place at the end of the year.

Sources said the round would involve several dozen partners – who command average pay packages of about £1m – leaving the firm.

PwC named about 60 new partners earlier this year under Marco Amitrano, who was appointed as its new UK boss in the spring.

Mr Amitrano is understood to have informed partners about the changes in a voice memo, although one insider disputed the idea that the numbers involved were “significant”.

The partner retirements come as the big four audit firms contend with a sizeable bill from increases in the Budget in employers’ national insurance contributions.

It emerged this week that Deloitte is cutting nearly 200 jobs in its advisory business, according to the Financial Times.

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An ongoing shake-up of the audit profession is not being restricted to the big four firms, with Sky News revealing on Wednesday that Cinven, the private equity firm, was in advanced talks to buy a controlling stake in Grant Thornton UK.

The deal, which is expected to value Grant Thornton at somewhere in the region of £1.5bn, was announced on Thursday morning.

PwC declined to comment.

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