OECD slashes UK growth forecast for 2017

But in its latest Interim Economic Outlook report, the OECD upped its prediction for the UK in 2016 to 1.8% from its previous 1.7% as it trimmed estimates for the global economy to 2.9% from its previous 3.0%, with the US cut even more heavily to 1.4% from 1.8%.

For 2017, the UK is expected to grow 1.0%, down from the previous 2% forecast, as worldwide growth picks up to 3.2%, though this was snipped from the prior 3.3% estimate.

US growth is forecast to pick up to 2.1% in 2017, though this is lower than the OECD's earlier 2.2% prediction.

The OECD cuts its euro area 2016 growth forecast to 1.5% from the previous 1.6%, with an expected further slowdown in 2017, with the estimate cut to 1.4% from 1.7%.

Japan is seen growing 0.6% this year, down from the previous 0.7% forecast, with the 2017 forecast raised to 0.7% from 0.4%.

The OECD noted that exceptionally low and sometimes negative interest rates were "distorting financial markets and raising risks across the financial system", while the disconnection between rising bond and equity prices and falling profit and growth expectations, combined with over-heating real estate markets in many countries, "increases the vulnerability of investors to a sharp correction in asset prices".

OECD chief economist Catherine Mann said: "The marked slowdown in world trade underlines concerns about the robustness of the economy and the difficulties in exiting the low-growth trap. While weak demand is surely playing a role in the trade slowdown, a lack of political support for trade policies whose benefits could be widely shared is of deep concern.

”Monetary policy is becoming over-burdened. Countries must implement fiscal and structural policy actions to reduce the over-reliance on central banks and ensure opportunity and prosperity for future generations.”