Britain is nearer recession than both the US and Europe, the Organisation for Economic Cooperation and Development (OECD) warned yesterday as it slashed its UK growth forecast.
The grim warning from the Paris based agency is the first time one of the world’s main public forecasters, has predicted a UK recession.
The OECD forecast third and fourth quarter GDP growth in Britain of -0.3 per cent and -0.4 per cent, and slashed its overall forecast for UK growth this year to 1.2 per cent from 1.8 per cent. The two quarters of negative growth satisfy the technical definition of recession. The OECD’s view on the UK, where it said the economy would “barely creep forward,” is the most negative of its views for the developed countries. It has predicted 1.3 per cent overall growth for the Eurozone and a bullish 1.8 per cent for the US this year.
“Financial market turmoil, housing market downturns and high commodity prices continue to bear down on global growth while at the same time evolving rapidly,” the OECD said in a statement.
“Data is on a downward trend so a negative growth number in the third quarter would not be that surprising,” commented Nick Bate, economist at Merrill Lynch.
Ahead of both the Bank of England and European Central Bank’s interest rate decision tomorrow, where both banks are expected to keep rates on hold, Jorgen Elmeskov, the OECD’s acting chief economist , said the monetary policies being pursued by central banks at the moment were “appropriate”.