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UK to face worst downturn of major economies

The UK economy will suffer a bigger blow from the global energy crisis than other leading nations, according to international body the Organisation for Economic Cooperation and Development (OECD ) .

The UK will contract by more than any other nation in the G7 group next year, it said.

Growth in the US and the eurozone will be weak, but Germany is the only other major economy expected to shrink.

The OECD forecasts a “significant growth slowdown” globally in 2023.

Thanks to the strength of emerging economies, the world economy will grow by 2.2% next year, the OECD’s latest report predicts.

But the war in Ukraine was affecting economies unevenly, the OECD said, with European countries bearing the brunt of the impact on business, trade and the spike in energy prices.

The G7 includes the US, UK, Canada, France, Germany, Italy and Japan. While growth is expected to be weaker in most countries in the group, only Germany and the UK will contract, the OECD predicts.

The OECD expects the UK’s economyto shrink by 0.4% in 2023 to be followed by shallow growth of just 0.2% in 2024.

By contrast, last week the UK’s Office for Budget Responsibility (OBR) predicted the UK would shrink by 1.4% next year, although it also predicted stronger growth, of 1.3% in 2024. The OBR said that would lead to the biggest drop in living standards on record.

Earlier this month the Bank of England predicted the downturn could last for two years.

Germany’s gross domestic product (GDP) is expected to fall by 0.3%, the OECD report says.

Of the wider group of G20 countries, only Russia, which is subject to economic sanctions, is predicted to fare worse than the UK.

Writing by Omotola Oguneye