May 25, 2024

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The OECD says the UK will have the weakest growth and the highest inflation in the G7

The OECD says the UK will have the weakest growth and the highest inflation in the G7

The UK will experience the lowest rates of economic growth and the highest inflation among the G7 countries this year and next, according to forecasts from the Organization for Economic Co-operation and Development published on Thursday.

The OECD cut its growth forecast for the British economy to 0.4% this year, compared with 0.7% forecast in February. Only Germany is expected to perform worse among the G7 advanced economies, which includes Canada, France, Italy, Japan and the United States.

UK growth is expected to recover to just 1.0% in 2025, compared to the OECD’s previous forecast of 1.2%, putting the UK at the bottom of the G7.

OECD forecasts show that the annual rate of increase in consumer prices in the UK will be the highest among the G7 countries this year and next.

The predictions are embarrassing for Prime Minister Rishi Sunak, whose conservative party has trailed the opposition Labor Party in opinion polls ahead of national elections.

Sunak told voters it would be unwise to abandon his party when its economic plan is starting to work.

Responding to the OECD forecast, Finance Minister Jeremy Hunt said: “The forecast is not particularly surprising as our priority over the past year has been to fight inflation with higher interest rates. He pointed to more optimistic forecasts from the International Monetary Fund.

In April, the IMF similarly predicted that the UK would have the second-slowest growth among G7 countries in 2024, but would expand faster than France, Germany, Italy and Japan in 2025.

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“Stronger real wage growth will support activity in the first half of 2024,” the OECD report for the UK said.

“However, ongoing services price inflation and financial burdens will continue to weigh on consumers’ purchasing power, weak external demand will limit trade growth, and uncertainty will deter business investment.”

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