United Kingdom growth in 2018 to be slowest in G20, says OECD

Faith Castro
March 14, 2018

As the Chancellor prepared to update MPs on the independent Office for Budget Responsibility's latest expectations for growth and borrowing, the OECD predicted the United Kingdom would see the slowest growth among the G20 economies this year, having largely outperformed rivals since the financial crisis.

A container ship is seen at the shipping terminal Eurokai in the Port of Hamburg, Germany November 6, 2017.

Pro-EU Labour MP Chuka Umunna wrote that the growth in each of the three years ahead "is forecast to be far lower" than what was projected before the EU referendum, which he said was "thanks to Brexit".

It said rebounding business investment was the core reason for the expected acceleration in global growth - with trade rising 5% this year.

"This could obviously threaten the recovery".

Higher pay increases would support the Bank of Japan's still elusive goal of attaining its 2 percent inflation target, according to economists.

"Certainly we believe this is a significant risk, so we hope that it doesn't materialise because it would be fairly damaging".

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Growth in the global economy could be brushing a four per cent pace over this year and next, providing a positive outlook for Australia's exporters.

With tax cuts boosting the economy this and next year, the OECD forecast the upper bound of the target federal funds rate could reach 3.25 percent by the end of 2019 from 1.5 percent now.

The UK economy will grow slower this year than any other major advanced country in 2018.

National Treasury now anticipates growth of 1.5% in 2018, rising to 2.1% in 2020.

The OECD said its revised forecasts also follow a substantially easier fiscal stance by Germany, something Treasurer Scott Morrison is unlikely to follow when he hands down his budget in May. Britain, however, was seen missing out on the global upturn, lagging all other G20 countries with growth of only 1.3 per cent this year, although up from a November forecast of 1.2 per cent due to the broader global improvement.

It also raised its Canadian growth outlook for next year to 2.0 per cent compared with its forecast in November for 1.9 per cent. In Germany, growth is seen coming it at 2.4 per cent this year and 2.2 per cent next, up from 2.3 per cent and 1.9 per cent previously.

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