OECD calls for less austerity and more public investment
The Organisation for Economic Co-operation and Development (OECD) has slashed predictions for the UK and global economies and called for "urgent" action to boost flagging growth.
The Paris-based body also called on countries to ease harsh austerity measures and instead spend on infrastructure.
In its latest Economic Outlook, the organisation cut forecasts for growth in the UK to 2.2% in 2016 and 2% in 2017, down from previous expectations for 2.4% and 2.3% respectively.
The OECD also took the axe to global growth predictions, at 3% for 2016 against the 3.3% pencilled in last November.
The well-respected think tank warned policy responses were needed to bolster the global economy as trade and investment weakened and sluggish demand caused low inflation and "inadequate" growth in wages and employment.
It said: "Global GDP growth in 2016 is projected to be no higher than in 2015, itself the slowest pace in the past five years. A stronger collective policy response is needed to strengthen demand. Monetary policy cannot work alone."
The OECD reduced growth estimates for every member of the G7 group of leading industrial nations - the US, UK, Germany, France, Italy, Japan and Canada.
It called on a number of countries to ease up on austerity measures and instead look to make use of cheap borrowing costs to spend on infrastructure.
"Quality infrastructure projects would help to support future growth, making up for the shortfall in investment following the cuts imposed across advanced countries in recent years," it said.
Richard Kirk, regional director of the Institution of Civil Engineers (ICE) in Northern Ireland, also emphasised the importance of infrastructure spending.
"Infrastructure and the services it provides drive the economy forward by generating jobs, productivity and wellbeing, with every £1 of investment generating £2.84 in the wider economy," Mr Kirk said.
His warning came after a dire start to the new year on financial markets amid global growth fears and plunging oil prices.
Banks have also seen a sharp shares sell-off over concerns they would be unable to withstand the shock of a global slowdown.
Chancellor George Osborne insisted that the OECD forecast was "another demonstration of the cocktail of risks facing the world this year".
"It is not surprising that this is expected to have an impact on growth in the UK, though thanks to our economic plan we are forecast to be the fastest growing of the G7 economies this year," he added.
The OECD's report also raised concerns that ultra low interest rates and quantitative easing money-boosting measures alone were no longer effective in helping economies.