(Aug 3): The UK Government should stick to its generous investment plans to boost productivity and keep the economy on a path toward “net zero” greenhouse gas emissions, the OECD said.

In a survey of the UK published Wednesday, the Paris-based institution said efforts to bring down the national debt should not come at the cost of neglecting the long-term problems facing the country.

“Like other economies around the world, the UK economy faces a number of headwinds, with pre-existing structural challenges magnified by the pandemic and Russia’s war of aggression against Ukraine,” OECD Secretary-General Mathias Cormann said. “The key to stronger economic growth and better opportunities will be stronger growth in productivity. That is why we welcome the government’s plans for large-scale investment in infrastructure, skills and innovation.”

The plea for “balance” in fiscal policy highlights the challenges for whoever succeeds Boris Johnson as prime minister.

The front runner, Foreign Secretary Liz Truss, has pledged tens of billions of pounds of tax cuts to help families through the cost of living crisis. Critics say doing so means the government will have to borrow more or spend less, and possibly both.

The OECD reiterated its forecast that the UK economy will stagnate in 2023 following growth of 3.6% this year. However, with inflation set to peak at over 10% in the fourth quarter, the Bank of England should to continue to increase interest rates to rein in inflation expectations, it said.