The world economy will expand at its fastest pace since 2011 this year – but the UK will continue to lag, according to the latest forecasts from the Organisation for Economic Co-operation and Development (OECD).
The Paris-based intergovernmental group said on Tuesday that it now anticipates the global economy to grow by 3.9 per cent both this year and next, from a previous forecast of 3.6 per cent for both years.
Growth will particularly be powered by private investment and trade, picking up on the back of strong business and household confidence, the OECD said. But it also warned that the risk of trade wars could derail expansion.
“Growth is steady or improving in most G20 countries and the expansion is continuing,” said OECD acting chief Economist Alvaro Pereira, “But an escalation of trade tensions would be damaging for growth and jobs.”
But the OECD struck a particularly cautious note with regards to Britain, pencilling in growth of only 1.3 per cent this year. That’s up from a November forecast of 1.2 per cent, but it would still see the UK lagging all other G20 countries.
In 2019, the year the UK is set to leave the EU, the OECD predicts that growth will slip to just 1.1 per cent.
The US economy, by contrast, is expanding by 2.9 per cent this year and 2.8 per cent next, helped by the simulative effect of tax cuts. In Germany, growth is coming in at 2.4 per cent this year and 2.2 per cent next, up from 2.3 per cent and 1.9 per cent previously.
Growth in France is expected to hit an 11-year high of 2.2 per cent this year, before easing to 1.9 per cent in 2019.
Last month, the UK’s GDP growth in the final quarter of 2017 was unexpectedly revised down to 0.4 per cent from a previous estimate of 0.5 per cent, meaning that overall for the year the economy grew by 1.7 per cent.