UK growth downgraded as likely to miss target

THE UK economy is set for “sluggish” growth over the next two years and is likely to miss previous forecasts, according to economists.

The Organisation for Economic Co-operation and Development (OECD) has downgraded its UK growth projections for 2024 and 2025, indicating it will witness the weakest growth across the G7 group of economies next year.

The organisation said in its latest economic outlook report that there are “some signs that the global outlook has started to brighten” amid easing inflation.

Global gross domestic product (GDP) is expected to grow by 3.1% this year, unchanged from 2023.

However, the UK’s economy is expected to grow at a much slower rate after interest rate rises to bring down inflation.

The OECD said “GDP growth is projected to remain sluggish” in the face of a “waning drag from past monetary tightening”.

The economy grew by 0.1% last year and is expected to see growth improve to 0.4% this year, the OECD said.

However, it represents a downgrade to forecasts after previously predicting 0.7%.

It also means it is on track to record the second weakest growth across the G7, with only Germany due to see a smaller increase.

Chancellor Jeremy Hunt said: “This forecast is not particularly surprising given our priority for the last year has been to tackle inflation with higher interest rates. But ... growth matters, which is why it is significant that last month the IMF (International Monetary Fund) predicted the UK will grow faster over the next six years than any European G7 country or Japan.”