Growth prospects in the UK and global economy have been slashed as the Organisation for Economic Co-operation and Development (OECD) called for “urgent” action to boost flagging growth.
In its latest Economic Outlook, the Paris-based OECD cut its 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.
It 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 weakens and sluggish demand is leading to low inflation and “inadequate” wage and employment growth.
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,” it added.
The warning comes after a dire start to the new year on financial markets amid global growth fears and as oil prices have plunged.
Banks have seen a sharp shares sell-off on concerns they are unable to withstand the shock of a global slowdown.
Chancellor George Osborne said the OECD forecasts are “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 said.
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