The UK economy will grow more slowly than expected this year and stagnate next year, a think tank has warned.
The Organization for Economic Co-operation and Development expects the UK economy to grow 3.6% this year, followed by 0% growth next year.
This means that in 2023 the UK will go from being the second fastest growing economy in the G7 group of developed economies to being the slowest growing.
The G7 members are the USA, Canada, Germany, Japan, France and Italy.
Laurence Boone, chief economist at the Paris-based think tank, said Britain is being hit hard by a combination of factors including higher interest rates, higher taxes, lower trade and more expensive energy and food.
Inflation is expected to continue rising, peaking above 10% by the end of this year before gradually declining to 4.7% by the end of 2023.
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However, the report does not take into account the emergency measures announced by the Chancellor on May 26. These measures, which included a £400 rebate on the energy bill for every UK household, are worth around £15 billion.
A Treasury Department spokesman said many people were concerned about the forecasts.
“While we cannot fully isolate the UK from global pressures, our economy is in a strong position to deal with these challenges. We have a growth plan and we support people with the cost of living,” they added.
The cuts in UK economic growth are being matched by a global slowdown, largely due to the war in Ukraine.
Global growth has been downgraded to 3% from 4.5% this year, according to the OECD in its latest economic outlook.
Growth forecasts were only raised for Argentina and Australia.
“The world will pay a heavy price for Russia’s war against Ukraine. A humanitarian crisis unfolds before our eyes, killing thousands, forcing millions of refugees to flee and threatening an economic recovery that was underway after a two-year pandemic,” the organization said.
“Since Russia and Ukraine are major exporters of commodities, the war has pushed up energy and food prices and made life much harder for many around the world.”
The OECD warned that Russia’s attack on Ukraine will result in higher inflation and lower growth for at least next year.
However, the organization stressed that prolonged hardship could be avoided through concerted action by governments and central banks.
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