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UK economy will deliver worst performance of any advanced country this year

Chancellor Jeremy Hunt has faced warnings that Britain is in the grip of a ‘lost decade’ on living standards (PA Wire)
Chancellor Jeremy Hunt has faced warnings that Britain is in the grip of a ‘lost decade’ on living standards (PA Wire)

Britain’s economy will not shrink by as much as previously feared but will still deliver the worst performance of any advanced country this year, a new report has warned.

In its interim assessment of the global economic outlook titled “A Fragile Recovery”, the Organisation for Economic Co-operation and Development said British GDP would fall by 0.2 per cent in 2023.

While that is an improvement on its November forecast for a drop of 0.4 per cent, the organisation found Britain would be the only major economy to contract this year with the US, Germany, France and Italy all set to grow.

The findings are in line with the UK’s fiscal watchdog, the Office for Budget Responsibility, which said earlier this week that Britain’s economy would shrink by 0.2 per cent this year but avoid a technical recession.

It is then due to grow by 1.8 per cent in 2024 and 2.5 per cent in the following year before growth cools.

In its analysis, the OECD said monthly data pointed to better growth prospects in the largest global economies. It added that in February “more firms reported rising output” with “substantial jumps” in the US, the eurozone and the UK.

Looking further ahead the OECD said: “The United Kingdom is also expected to have a mild rebound in 2024, with output rising by 0.9 per cent after a year-on-year decline in 2023.”

Despite delivering an upbeat assessment of Britain’s short-term prospects in his Budget on Wednesday, Chancellor Jeremy Hunt has since faced warnings that Britain is in the grip of a “lost decade” on living standards.

The OBR says real household disposable income per person, a measure of real living standards, is expected to fall by a cumulative 5.7 per cent over the financial years 2022-23 and 2023-24.

In London shares rallied for a second day on growing hopes that the bank scares in America and Switzerland will not trigger a major global financial crisis. By mid morning, the FTSE-100 index of leading shares was up 0.8 per cent or 61.97 points to 7,472.