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OECD cuts its forecast for growth in the UK


Warning: Angel Gurria

Warning: Angel Gurria

Warning: Angel Gurria

The OECD has cut its forecast for UK growth as it sounded a warning about the dangers facing the world economy.

Gross domestic product (GDP) is now expected to increase by 3% this year, down from 3.1%, according to the international think-tank.

It still leaves the UK growing faster than any other major advanced economy.

But the growth forecast for next year was also scaled back by 0.1%, to 2.7%, as the US remains on course to lead the recovery race in 2015.

In its latest economic outlook, the Organisation for Economic Co-operation and Development warned of a "global economy stuck in low gear", with trade and investment growth underperforming.

Secretary general Angel Gurria said: "We are far from being on the road to a healthy recovery. There is a growing risk of stagnation in the euro zone that could have impacts worldwide, while Japan has fallen into a technical recession."

The OECD said the GDP outlook together with high unemployment "should spur governments with a greater sense of urgency to fully employ monetary, fiscal and structural policy levers to support growth, notably in Europe".

Chief economist Catherine Mann said more action would be needed from the European Central Bank - which is under pressure to expand stimulus by buying government bonds.

"A Europe that is doing poorly is bad news for everyone," she said.

Meanwhile, the report said UK growth was "set to continue at a strong, if slightly easing, pace" despite the squeeze on public spending.

It said expansion had been propelled by high job creation and it would be sustained by "robust private consumption and investment" next year and in 2016 - when GDP is expected to grow by 2.5%. Business investment had continued to recover strongly as uncertainty fades.

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