02/09/2008Britons should prepare for recession this year, the Organisation for Economic Co-operation and Development (OECD) warned Tuesday.
The UK economy is set to contract at an annual rate of 0.3% during the third quarter, according to the Paris-based think tank, then by 0.4% in the final quarter of 2008. Two quarters of negative growth counts as a technical recession.
Data released by the Office for National Statistics last month showed the economy ground to a halt between April and June, prompting calls for the Bank of England to cut interest rates.
Annual growth came in at its weakest since the end of 1992, having been revised down from 1.6% to 1.4%, the same as predicted by the International Monetary Fund. The OECD cut its forecast to just 1.2% from 1.8%.
"Financial market turmoil, housing market downturns and high commodity prices continue to bear down on global growth while at the same time evolving rapidly," said the OECD's head of economics Jorgen Elmeskov.
The UK's prospects are the worst of all the G7 nations, with third quarter growth set to stall in both Germany and Italy before growing again in the following quarter by 0.1% and 0.6% respectively.
Japanese growth is seen slowing to 1.4% in the fourth quarter from 2.4% in Q3, while the US will manage growth of 0.9% in the three months to September and 0.7% at the end of the year.