A new OECD report suggests that the UK is doing better than other G7 countries as the international body upgraded its UK growth forecast for Q3 to 0.7 per cent compared to the earlier forecast of 0.5 per cent.  While this is lower than the second quarter growth achieved by the UK, it would still be higher than that of Canada, France, Germany, Italy, Japan and the US.

The OECD expects the growth in the industrialised economies to slow down and predicted they would grow by 1.5% in the second half of 2010 which is less than the earlier forecast of 1.75% in May. The Paris based think tank urged governments to push back tax rises as well as spending cuts to avoid a double dip recession "wherever public finances permitted".

"Recent high-frequency indicators point to a slowdown in the pace of recovery of the world economy that is somewhat more pronounced than previously anticipated," the OECD said.

"It is not yet clear whether the loss of momentum in the recovery is temporary … or whether it signals greater underlying weaknesses in private spending at a time when public support is being removed."

The OECD predicts the US to have an annualised growth rate of 2 per cent while the UK is expected to have an annualised growth of 2.7 per cent.

A Treasury spokesperson claimed that the growth figures produced by the OECD demonstrated that the UK economy was recovering.

"The OECD's latest forecasts have the UK growing faster than any country in the G7 this quarter and second fastest next quarter, at rates broadly in line with the OBR's budget forecast," he said.

The Bank of England left UK interest rates at 0.5% yesterday and maintained its programme of quantitative easing at £200bn.

"The fiscal situation in the UK deteriorated particularly sharply during the recession, making correction as planned both desirable and necessary," said Luiz de Mello, an economist at the OECD.

The UK has also moved up one spot to 12th in the World Economic Forum's (WEF) annual global competitiveness leage.