The club of affluent nations anticipated that Britain’s economy will stagnate through 2023, with no increase in the gross domestic product – a poorer prognosis than any other OECD member.
Rishi Sunak has been advised by one of the world’s foremost economic authorities to reduce taxes or increase spending in the face of impending economic stagnation next year.
New projections from the Organisation for Economic Co-operation and Development indicate that the United Kingdom will see the slowest economic growth in the industrialized world in 2019.
In its most recent thorough estimates for the global economy, the OECD – a group of wealthy nations – forecasted that Britain’s economy will stagnate, with no growth in the gross domestic product beyond 2023 – a poorer outcome than any other OECD member.
According to the document, the chancellor should “consider pausing fiscal consolidation to assist growth.”
The intervention comes as the chancellor faces increased pressure from the prime minister and cabinet colleagues to slash taxes, despite having provided more support for households in a new package just one month prior.
Even after taking into account this package, which included a windfall tax for energy businesses, the OECD stated that the United Kingdom’s “fiscal stance” – the cumulative effect of all government decisions on taxation and spending – remained “contractionary.”
The research warned that while the UK’s economic outlook for the coming year was particularly bleak, all countries have been badly impacted by the war in Ukraine, stating, “The world will pay a big price for Russia’s war against Ukraine.
It stated that its inflation projections had doubled since its pre-war projections and that the global gross domestic product would increase by 3 percent in 2022, compared to its pre-war projection of 4.5 percent growth.
It was also stated that a lack of food was one of the greatest threats the globe faces today.
“Avoiding a food crisis is the priority,” the report stated. “Today, the world produces enough grains to feed everyone, but prices are extremely high and there is a danger that this output will not reach those who require it the most.
“Particularly in low-income and emerging-market nations, food must be made available to customers at reasonable prices through global cooperation.
“This may necessitate further international help and cooperation in the logistics of transporting and distributing aid to countries in need.
“Still vivid in our minds are the shortcomings of worldwide vaccine delivery. Not to be repeated.”
It also cautioned that widespread cost-of-living difficulties would expand the gap between the wealthy and the impoverished.
Chief economist Laurence Boone said: “Inflation is a burden that must be appropriately distributed among individuals and businesses, between profit and wages. Governments must also assist those who are most susceptible to rising food and energy prices.”
The OECD analysis revealed that while there were considerable differences in the inflation experienced by richer and poorer households (with the latter typically incurring higher prices), the disparity in the United Kingdom was greater than in the majority of other OECD countries.
A Treasury spokesperson commented on the OECD’s warning to the United Kingdom: “Due to the support we provided during the pandemic, the UK had the fastest growth among the G7 last year, and our unemployment rate is the lowest it has been in nearly 50 years – but we recognize that many people will be concerned by these projections.
Although we cannot completely insulate the UK from global pressures, our economy is in a great position to face these obstacles. We have a growth strategy in place, and we assist individuals with their living expenses.”
