OECD says UK economy will collapse to zero growth in 2023 Business News

Britain’s economy is set to grind to a halt next year as the country registers zero growth and lags behind all other major developed countries except Russia, according to new analysis.

The Organization for Economic Co-operation and Development (OECD) predicts that the UK will continue to be plagued by high inflation and see no growth next year.

The international body warned that the war in Ukraine immediately slowed the global economic recovery from Covid-19 and led to higher inflation.

Europe has been hardest hit due to the continent’s heavy reliance on energy imports, the OECD said, adding that the war had re-emphasized the need for energy security and accelerating the green transition. .

It has reduced its global growth strike to 2.8% next year, down sharply from the forecast made in October.

“Countries around the world are being hit by rising commodity prices, which are adding to inflationary pressures and dampening real incomes and spending, holding back the recovery,” said OECD Secretary-General Mathias Cormann. , during a presentation on Wednesday.

“This slowdown is directly attributable to Russia’s unprovoked and unjustifiable war of aggression, which is leading to lower real incomes, weaker growth and fewer job opportunities around the world.”

The euro zone economy is expected to grow by only 1.6% and that of the United States by 1.2%. UK growth is estimated at zero, in line with Bank of England estimates.

Lack of growth and high inflation would mean a further decline in living standards for UK households who have already started to feel the effects of a cost of living crisis.

Fuel prices have hit new highs almost every week, while energy bills are on track to more than double.

The OECD report suggests that further price rises are in sight, with inflation staying higher for longer than expected, reaching levels not seen since the 1970s in some countries, including the UK.

“High inflation erodes household incomes and spending, hitting vulnerable households particularly hard,” the report said.

“The risk of a severe food crisis remains acute for the world’s poorest economies due to the high risk of supply shortages and high costs.”

The figures laid bare the “extreme challenges” facing Britain’s economy, said Labour’s shadow chancellor Rachel Reeves.

“The fact that economic growth in the UK will come to a halt next year, with only Russia performing worse than us at the G20, is a shameful accusation of the chaos and incoherence of this Conservative government.

“It reveals a conservative economic strategy centered on low growth and high taxes.

It came as the boss of one of the world’s biggest commodities traders warned that oil prices could enter a ‘parabolic state’ as supplies dwindle later this year and buyers squabble a limited number of barrels of crude.

“We have a critical situation,” Jeremy Weir, chief executive of Trafigura, told a FinancialTimes conference on Tuesday.

“I really think we have a problem for the next six months. . . once it reaches those parabolic states, the markets can move and they can go up a lot.