In 2014, the UK was the fastest-growing economy in the G7. Four years later, it will be slowest, according to the OECD’s latest forecasts (pdf).
In 2018, the UK economy is expected to expand by just 1%, down from 1.6% this year, the OECD forecasts. As analysts at Commerzbank put it, these projections “make for depressing reading.” The British economy is suffering from a slowdown in consumer spending because higher inflation stoked by the weaker pound since the Brexit vote has squeezed already slow-growing incomes. A low unemployment rate has done little to boost wage growth. Commerzbank’s analysts say that even though inflation is likely to peak soon, Brexit-related risks means that the OECD’s pessimistic assessment of the UK economy “should not be dismissed out of hand.”
In the OECD’s previous forecasts, published in June, the UK was projected to be the second-slowest growing economy in the G7, tied with Japan and above Italy. In the subsequent three months, the OECD revised up it forecasts for Italy and Japan, while keeping the UK the same, which left Britain at the bottom of the list. Meanwhile, the OECD forecasts global GDP growth to strengthen from 3.5% in 2017 to 3.7% in 2018.