UK growth to be slowest in developed world, says OECD

The UK is set to experience the slowest growth in the developed world next year, according to the Organisation for Economic Co-operation and Development (OECD).

In its latest Economic Outlook, the OECD said it expects the UK economy to grow 3.6% this year, with no growth forecast for next year. That means it will go from being the second-fastest growing economy in the G7 to the slowest in 2023.

Previously, the Paris-based think tank had forecast growth of 4.7% for this year and 2.1% for next year. However, it said on Wednesday that it expects the UK to suffer more than any other major industrial country from the impact of the Ukraine conflict.

It also said the UK government should consider slowing fiscal consolidation to support growth.

"The UK economy is susceptible to economic spillover effects from Russia’s invasion into Ukraine through rising energy prices and supply chain disruptions," the OECD said.

"Private consumption will slow as rising prices erode households’ incomes. Household savings will decline to below pre-pandemic levels, with some households taking on more debt to keep up with the rising cost of living. Inflation will continue to rise, peaking at just over 10% in the fourth quarter of 2022, driven by increasing global prices of tradable goods and services due to supply bottlenecks, transportation costs and energy prices."

Global GDP growth is now expected to slow sharply this year, to around 3%, and remain at a similar pace in 2023. The OECD said this is well below the pace of recovery projected last December.