OECD Forecasts: UK to Be G7’s Lowest Performer Next Year

_OECD Forecasts UK to Be G7's Lowest Performer Next Year
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London (Parliament News) – OECD predicts the UK to be G7’s weakest performer in 2025 due to inflationary pressures and skilled labour shortages. The global economic outlook remains modest but improving, with varied growth rates across major economies.

Britain will be the worst-performing economy in the G7 next year, according to the Organisation for Economic Cooperation and Development, as high-interest rates and the lingering outcomes of last year’s wave in inflation drag on expansion. In a downbeat examination, the Paris-based thinktank also devalued its forecast for UK growth this year to 0.4% from a November forecast of 0.7%.

How Will the UK’s Economic Growth Compare in 2025?

According to the Guardian, The UK will fall to the footing of the G7 growth league in 2025, the OECD forecasts, with an increase of 1%, just behind Germany at 1.1%. The US and Canada are predicted to be the fastest-growing economies in the G7 next year, both rising 1.8%.

The OECD expressed Britain’s growth rate would be exhausted by persistent price rises in the services sector and deficiencies of skilled staff that will push back anticipated cuts in interest rates.

Are High-Interest Rates Holding Back UK’s Expansion?

The think tank predicts the Bank of England to delay the first cut in interest rates from 5.25% until the autumn after fears that price increase could rebound. The review followed a more optimistic perspective of the global economy, which the OECD stated was acquiring strength despite the danger of worsening conflicts in Ukraine and the Middle East.

“There are some signs that the global outlook has started to brighten, even though growth remains modest,” it stated in a half-yearly health check. Global GDP shift is projected to be 3.1% in 2024, untouched from 2023, before edging up at 3.2% in 2025 helped by more robust growth in household incomes and more inferior interest rates.

Which G7 Nations Will Lead in Economic Growth Next Year?

In difference with the UK, growth rates in France, Germany and the US were boosted by the OECD for 2024, though at 0.2%, Germany’s rate increase would lag the UK this year.

A recovery is anticipated in the eurozone while development moderates in the US, India and other emerging-market economies.

Will Inflation Ease Across G20 Economies by 2025?

Annual consumer cost inflation in the G20 economies – which includes the UK, Brazil, Saudi Arabia, France and Mexico – is projected to reduce gradually, helped by fading cost coercion, falling to 3.6% in 2025 from 5.9% in 2024. “By the end of 2025, inflation is projected to be back on target in most major economies,” the report stated.

Governments conveying much of the world’s output are expected to maintain a tight rein on spending, even as interest rates start to decline, allowing the effect of cheaper money rather than public spending to reduce the cost of living crisis facing many low- and middle-income groups.

What Investments Does the OECD Recommend for the UK’s Growth?

In a caution to the UK government, the OECD said the chancellor, Jeremy Hunt, “should stay prudent and concentrate on productivity-enhancing public investment”.

“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,” the report stated.

“Proceeding with the childcare reform will help tackle economic inactivity, but requires contingent planning to address potential bottlenecks, in particular likely staff shortages.” Cuts to Whitehall budgets already in the pipeline would decrease the government’s spending deficit from 4.6% this year to 3.5% next year, it said.

Federica Calabrò

Federica Calabrò is a journalist at Parliament News, She is covering Business and General World News. She is a native of Naples, commenced her career as a teller at Poste Italiane before following her passion for dance. Graduating in classical dance, she showcased her talents with two entertainment companies, enchanting audiences throughout Italy. Presently, Federica serves as the general secretary at the Allianz Bank Financial Advisors financial promotion center in Naples. In this capacity, she manages office forms, provides document assistance for Financial Advisors, oversees paperwork for the back office, and ensures smooth customer reception and assistance at the front office. Outside her professional obligations, Federica indulges in her passion for writing in her leisure time.