UK growth to be slowest in G20 this year, says OECD

Latest news

    Manufacturing workersImage copyright Getty Images

    The UK economy will grow at a slower pace than any other major advanced or emerging nation this year, according to the OECD.

    Ahead of the Spring Statement, the think-tank raised its UK growth forecast to 1.3% in 2018 amid a strengthening global recovery.

    This is up from an earlier projection of 1.2%, but is the weakest in the G20.

    The OECD predicts the fastest world growth since 2011 this year, helped by US tax cuts and spending in Germany.

    The Paris-based organisation said the world economy was on course to expand at an annual pace of 3.9% over the next two years.

    This is up from a forecast last November of 3.7% in 2018 and 3.6% in 2019.

    However, it warned that the recovery risked being undermined by an escalation in trade barriers that would hurt growth and jobs.

    Productivity boost needed

    The OECD said higher inflation in the UK would continue to squeeze household incomes.

    Weak business investment would also weigh on growth for the next two years amid uncertainty surrounding the Brexit negotiations.

    It left its prediction for UK growth in 2019 unchanged at 1.1%. This would be the joint-slowest expansion alongside Japan.

    City and academic economists expect the UK economy to expand at an annual pace of 1.5% over the next two years, and Chancellor Philip Hammond is expected to reveal a more optimistic outlook in updated official forecasts on Tuesday.

    Image copyright Getty Images

    Álvaro Pereira, the OECD’s acting chief economist, urged the UK to introduce more policies to boost living standards, as well as address regional disparities.

    “We do think that it’s very important for the UK to invest more in productivity enhancing infrastructure,” he said.

    “A lot of investment happens in London, it doesn’t happen in many other areas. More needs to be done to enhancing productivity in the rest of the UK.”

    The OECD has been criticised for its pessimistic economic forecasts before and after the EU referendum.

    Three months after the UK voted in June 2016 to leave the EU, it predicted economic growth of just 1% in 2017. However, official figures show the economy expanded by 1.7% last year.

    Mr Pereira said the OECD had been “fairly consistent” in its forecasts.

    He said: “[Ahead of the referendum] we were talking about rates of growth of around 2% for the UK. Right now we are talking about substantially lower rates of growth. We have not changed our view on Brexit.”

    Global optimism

    The OECD’s latest economic outlook showed all but one G20 nation – Russia – was set to grow at a faster pace this year than predicted last November.

    Mr Pereira said global growth would be led by a recovery in investment, while an increase in trade volumes of 5.2% in 2017 was expected to continue in 2018.

    He said: “Investment is coming back, and so this is very good news for good new for jobs and growth across the economies.”

    However, the think-tank warned that trade barriers posed a threat to growth,

    Last week, President Trump signed controversial orders imposing heavy tariffs on steel and aluminium.

    The European Commission vowed to retaliate if hit by the tariffs.

    Mr Pereira said a global trade war would be harmful for the global economy.

    “Any escalation, any retaliation or a tit-for-tat type of scenario would be very damaging,” he said.

    “I think it is very important to avoid escalation and to initiate a strengthening in the global dialogue to solve not only the problem for steel but to avoid bigger repercussions in terms of trade.”

    View the original article: http://www.bbc.co.uk/news/business-43384718

    http://www.bbc.co.uk/news/business-43384718

    In the same category are

    Commons set for Brexit vote showdown Image copyright PA The row over how much of a say MPs should get in the Brexit process returns to the House of Commons later.On Monday, the House of...
    Rural residents hang up on mobile banking, regulator finds Image copyright Getty Images Consumers in rural areas of the UK are far less likely to use their smartphones for banking than their urban counterpar...
    Newspaper headlines: GCHQ Brexit warning and fizzy drink ‘shortage’ By BBC News Staff Image caption The Guardian says the director of surveillance agency GCHQ has made an unprecedented intervention in a growing r...
    General Electric drops out of Dow index Image copyright Getty Images General Electric is losing its place on the Dow Jones Industrial Average after more than 100 years in a move that refle...
    World Cup 2018: England’s Harry Kane wants to be ‘best in the world’ The making of England's Kane2018 Fifa World Cup on the BBCHost: Russia Dates: 14 June - 15 JulyLive: Coverage across BBC TV, BBC Radio and BBC Sport ...
    The nurses tackling mental illness in police custody An estimated third of those arrested by police in England are experiencing mental health problems.Most police forces now have mental health nurses wor...

    Leave a comment

    Your email address will not be published. Required fields are marked *

    This site uses Akismet to reduce spam. Learn how your comment data is processed.