03 May 2024
The UK will see the slowest growth of the G7 nations next year, the Organisation for Economic Co-operation and Development (OECD) has warned.
OECD forecasts show that UK GDP will rise by just 1% in 2025, well below predictions for other G7 nations.
The OECD said that economic growth in the UK will also be 'sluggish' this year.
It expects the UK economy to grow by 0.4% this year, downgraded from its previous prediction of 0.7%. According to the OECD, only Germany will see slower economic growth this year.
Certain measures 'could help to lower fiscal pressure', the OECD said, outlining the government cuts to National Insurance and its Tax-Free Childcare (TFC) scheme as being potentially beneficial.
However, the OECD said that any increase in public spending should happen only after interest rates have been lowered. It predicted that the Bank of England will reduce the cost of borrowing from 5.25% to 3.75% by the end of next year.
The OECD report said: 'Fiscal prudence is required as inflation remains above target, and spending is to be directed towards supply enhancing investment, including infrastructure, the National Health Service, and adult skills
'Proceeding with the childcare reform will help tackle economic inactivity, but requires contingent planning to address potential bottlenecks, in particular likely staff shortages.'