New analysis has shown that the UK economy will continue to underperform other countries in the group of advanced seven (G7) economies this year, despite improved growth forecasts.
Only Germany, which slipped into recession earlier in the year and will stagnate through 2023, will fare worse than the UK.
An analysis by the Organization for Economic Co-operation and Development (OECD) assumes that the British economy will just survive growth this year.
It expects GDP to grow by 0.3% before moderating to 1% in 2024.
This compares to the OECD’s previous forecast in March, which called for GDP to fall by 0.2% this year and rise by 0.9% next year.
The global economy is about to turn around, but still has a long way to go to achieve strong and sustainable growth
All other G7 economies apart from Germany – the US, Canada, France, Italy and Japan – are expected to grow faster this year, showing that the UK is lagging behind on the international stage.
The rate is significantly lower when compared to the group of 20 advanced economies (G20) as a whole, which is forecast to grow by 2.8% this year and 2.9% next year.
“The global economy is at a turning point, but still has a long way to go to achieve strong and sustainable growth,” said OECD Chief Economist Clare Lombardelli.
The UK economy is “supported” by government investment and spending, including measures to support energy bills, according to the OECD.
And as energy prices fall, inflation will ease and global economic conditions will improve.
“However, despite falling inflation, weak household income growth will weigh on consumption, monetary tightening will slow both the housing market and already sluggish business investment, and uncertainty will continue to reduce trade’s contribution to growth,” the OECD said in her report.
Core inflation – which excludes food and energy prices – is likely to be more persistent, falling to just 3.2% in 2024, forecasts show. And unemployment will rise, reaching 4.5% next year.
The Paris-based organization also stressed that women’s skills are underutilized in the labor market as they disproportionately work part-time due to caring responsibilities.
She urged the government’s new childcare measure to be “swiftly implemented” to improve participation in the national labor market – which provides 30 hours a week of free childcare for working parents of children aged nine to 24 months.
The policy is not scheduled to come into force until 2024 and may not fully come into effect until September 2025.
The OECD also said that energy subsidies should be phased out, except for measures to support vulnerable households.
https://www.standard.co.uk/business/business-news/uk-economy-still-lagging-behind-other-nations-despite-upgraded-forecast-b1086105.html Despite improved forecasts, the British economy still lags behind other countries