Yahoo Finance UK Growth Forecast Slashed By OECD
The Organisation for Economic Co-operation and Development has slashed its forecast for UK growth more than for any other major country in its latest economic forecasts.
The Paris-based organisation reduced its 2012 growth forecast for Britain by more than an entire percentage point, cutting it from the 0.5% growth it predicted in May to -0.7% - a major contraction.
The OECD cut was more than for any other major economy, including Italy, and comes as David Cameron and chancellor George Osborne unveil new plans intended to kickstart growth in the UK.
The report warns that a further intensification of euro area instability could have significant spillover for global demand.
It added that failure in the US to avoid the "fiscal cliff" could derail an already weak recovery.
The OECD said oil prices have rebounded despite recent soft activity and remain sensitive to supply disruptions and geopolitical risks.
And according to forward-looking indicators, the loss of momentum at the G7 level may persist through the latter half of this year, with the recession in the euro area and associated trade and confidence headwinds enduring.
It said the US is an exception with comparatively stronger growth reflecting, among other things, progress in balance sheet adjustment and improving housing market conditions.
The OECD also voiced ongoing fears about the eurozone.
"Concerns about the possibility of exit from the euro area are pushing up (government bond) yields, which in turn reinforces break-up fears, the OECD said.
"It is crucial to stem these exit fears. This could be achieved by the ECB undertaking bond market intervention to keep spreads within ranges justified by fundamentals."
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