UK economy expected to be second-worst in G20 this year

Chancellor Jeremy Hunt pointed to last year’s economic data as new forecasts show the UK’s economy may be one of the worst among global peers this year (Victoria Jones/PA)

The UK’s economy is expected to perform the worst out of any Group of 20 (G20) economies apart from Russia this year and next, new analysis has suggested.

The Organisation for Economic Co-operation and Development (OECD) said that it expects a 0.2% fall in UK gross domestic product (GDP) this year, followed by a rise of 0.9% next year.

It is worse than all countries but Russia, whose GDP is forecast to dip 2.5% this year followed by a 0.5% drop in 2024, the organisation’s economists said.

It means that the UK is the only country apart from Russia – which is subject to serious sanctions – to see its economy shrink this year. In 2024 the slight growth in the UK will be on par with South Africa and the United States.

Chancellor Jeremy Hunt said: “The British economy has proven more resilient than many expected, outperforming many forecasts to be the fastest growing economy in the G7 last year, and is on track to avoid recession.

“Earlier this week I set out a plan to grow the economy by unleashing business investment and helping more people into work, alongside extending our significant energy bill support to help with rising prices, made possible by our windfall tax on energy profits.”

Despite not addressing the new figures, Mr Hunt won some support from OECD secretary general Mathias Cormann.

He said: “We believe the measures that the Government is taking to address these issues are going to be very important to improve the economic outlook for the United Kingdom moving forward, but there are some particular challenges that are playing out at the moment.”

The OECD said that it expects global GDP to grow by 2.6% this year and 2.9% in 2024. The biggest gains will be made in China – up 5.3% this year – and India – up 5%.

Mr Cormann said that he did not think that recent bank failures in the US and the struggles of Credit Suisse were spread much more widely.

“So far, we really do believe that the regulatory environment globally has improved very significantly since the global financial crisis.

“There is of course increased financial stability risk with the level of financial turbulence – markets are jittery. We do believe that the risks of this spreading more widely are quite contained at this stage.”