UK economy expected to be second worst in G20 this year – OECD

The Organization for Economic Co-operation and Development (OECD) said it expects Britain’s gross domestic product (GDP) to fall by 0.2% this year, followed by a 0.9% increase next year.

It’s worse than any country except Russia, whose GDP is expected to fall by 2.5% this year, followed by a 0.5% contraction in 2024, the organization’s economists said.

That means the UK is the only country, along with Russia – which is subject to heavy sanctions – to see its economy shrink this year. In 2024, slight growth in the UK will catch up with South Africa and the United States.

Chancellor Jeremy Hunt said: “The UK economy has proved more resilient than many expected, beating many forecasts to be the fastest growing economy in the G7 over the past year and is on track to avoid a recession.

“Earlier this week I laid out a plan to boost the economy by unlocking business investment and helping more people find jobs, while expanding our significant support for energy bills to help with rising prices, caused by our windfall tax on energy gains is made possible.”

Although he did not address the new figures, Mr Hunt won some support from OECD Secretary General Mathias Cormann.

He said: “We believe the action taken by the Government to address these issues will be very important in improving the UK’s economic prospects going forward, but there are some particular challenges at this time.”

The OECD expects global GDP to grow by 2.6% this year and 2.9% in 2024. The biggest gains are coming from China – up 5.3% this year – and India – up 5%.

Mr Cormann said he didn’t think the recent bank failures in the US and the struggles at Credit Suisse were much more widespread.

“So far, we truly believe that the regulatory environment around the world has improved significantly since the global financial crisis.

“Of course, with the scale of the financial turmoil, there is an increased risk to financial stability – markets are nervous. We believe the risks of this further spread are quite limited at this point.”