THE OECD's latest UK Economic Survey has indicated that the economic growth will be subdued this year and also next, but the UK Government needs to continue its fiscal consolidation and structural reform schemes.

Spending cuts will curb government consumption, investment and household income growth over the 2011-12 period, but will bring long-term gain. The OECD says that pushing through key reforms will address fiscal sustainability concerns and help bring about a long-term rebalancing of the UK economy.

The UK VAT system is one of the least efficient in the OECD area, with less than 60% of potential revenues actually collected. Targeted support should be introduced to compensate poorer households for VAT increases. Combining these measures would support the recovery, enhance efficiency and protect the weakest without harming consolidation.