UK to lag global growth, says OECD

The OECD has released a new report in which it outlines Britain's laggard status compared to other major world economies. While the US, Japan, France and Germany will return to growth towards the end of this year, the UK will instead shrink in the period overall. The study represents a deterioration for the UK, while the position elsewhere has improved.

Henrik Braconier, head of UK research at the OECD, said of the report: "Developments in the financial sector continue to effect the UK so much more [than elsewhere] and there was less fiscal stimulus and less room for fiscal stimulus. The hit for the housing market has also been much more."

The organisation has downgraded its UK growth forecast for 2009 to -4.7 per cent from -4.3 per cent, worse than every other G7 country, even the US, which will shrink 2.8 per cent, according to the OECD. It comes in direct contradiction to Chancellor Alistair Darling's latest upbeat estimate of growth in the second half. The downgrade means Britain will be at least six months behind its competitors in its recovery, with implications for employment, tax and government spending.

The OECD's figures will make life difficult for the UK government, which has relatively little room for stimulus, due to its poor finances and will be keen for the G20 to continue with global stimulus plans, which look increasingly unecessary.

WHAT THEY ARE SAYING:Jeremy Warner in the Daily Telegraph: "So no repeat of the Great Depression then? It seems not, but the damage inflicted by the worst banking crisis in history is none the less quite bad enough. The banking sector, with quite a bit of help from the US and UK governments, has wrecked the economy and wrecked the public finances. The coming fiscal consolidation will crimp growth for years to come."

Sean O'Grady in the Independent: "Mr Darling has to get other people to buy him his favourite cocktail – a fiscal stimulus with a twist of monetary boost and a car scrappage scheme chaser. Thus, when he tells other governments, such as the French and Germans... that they must carry on spending their way out of recession, what he really means is that he wants them to carry on spending their way out of our recession – because he is skint." ·