UK economy faces slower growth, higher Inflation – OECD 

The Organisation of Economic Co-operation and Development (OECD) has revised down its growth forecast for the UK economy from 0.7 per cent to 0.4 per cent for this year, with only Germany predicted to perform worse among the G7 economies, according to a Thursday release.

By 2025, the UK’s growth is expected to recover slightly to 1.0 per cent, a decrease from the OECD’s previous forecast of 1.2 per cent, which places the UK at the bottom of the G7 in terms of growth.

Furthermore, the OECD forecasts indicate that the UK’s annual rate of consumer price growth will likely be the highest among G7 countries with comparable inflation measures, both this year and next.

These forecasts present a challenge for Prime Minister Rishi Sunak, whose Conservative Party is currently trailing behind the opposition Labour Party in opinion polls, ahead of a likely national election later this year, according to Reuters.

Despite this, Finance Minister Jeremy Hunt has defended the government’s economic plan, stating that tackling inflation with higher interest rates has been a priority over the past year. He also pointed to more optimistic forecasts from the International Monetary Fund.

The OECD has advised that rebuilding fiscal buffers should be a priority for the UK government, necessitating “credible” budget plans. However, economists warned in March that the public spending assumptions underpinning Hunt’s budget were unrealistic.