UK ‘will be only G20 economy apart from Russia to shrink this year’
The UK will be the only economy in the G20 apart from Russia to shrink this year as high inflation, the energy crisis and low productivity hinder its recovery, according to a leading international institution.
The Organisation for Economic Co-operation and Development (OECD) said all major EU economies will expand in 2023 at a stronger pace than it had forecast last year, leaving Britain and Russia the only members of the G20 group of wealthy nations to suffer a decline.
In its half-yearly outlook, the Paris-based organisation said the UK economic outlook had improved slightly compared with its forecast in November of a 0.4% contraction, largely in response to falling gas prices, but would still shrink by 0.2% this year.
Germany’s economy was expected to contract this year by 0.3% but the EU’s largest economy has recovered quickly from its dependence on Russian gas and global shortages of raw materials and is now forecast to grow by 0.3%.
Under the heading “a fragile recovery”, the OECD said it expected to see a further rebound in consumer confidence and business output this year across its 39 member countries – who include other countries in the G20 such as Mexico, Indonesia, South Korea and the US, but not Russia, plus other smaller countries such as EU states – although from low levels in 2022 when the shock from Ukraine was at its height.
It said there were “more positive signs” now that food and energy prices were falling back, and the Chinese economy had fully reopened.
However, the slow recovery from the coronavirus pandemic would continue while central banks kept interest rates high and the Ukraine war persisted.
“Global growth is projected to remain at below trend rates in 2023 and 2024, at 2.6% and 2.9% respectively,
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