UK Economy To Be Worst Hit Of All G7 Nations: The Organization for Economic Cooperation and Development has predicted that the economy will contract more than that of any of the other six nations that make up the group of the largest industrialized democracies in the world.
According to research, the UK economy will take the largest blow out of all the G7 countries in 2019.
In comparison to the other six nations that make up the group of the largest industrialized democracies in the world, the economy is expected to contract more, according to predictions made by the Organization for Economic Cooperation and Development.
UK Economy To Be Worst Hit Of All G7 Nations
GDP, a metric of economic output, is projected to decline by 0.4% in 2019 and increase by 0.2% in 2024. This is an improvement over earlier OECD predictions that the economy would remain static.
Germany’s economy, the only other G7 member to face a decline in 2017, will do so at a slower rate of 0.3%.
In the vast majority of the G7 countries, growth will be modest. The GDP of Italy will increase by 0.2%, that of the US by 0.5%, that of France by 0.6%, and that of Canada and Japan by 1% and 1.8%, respectively.
The UK economy will perform the third worst among the G20 nations, after Sweden and Russia, with predicted contractions of 5.6% and 0.6%, respectively.
According to the organization’s economic forecast study, the government’s energy price guarantee program will cause inflation to rise, necessitating an increase in interest rates, which would raise the cost of borrowing.
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MORE ON THE ENERGY CRISIS
The issue, according to the paper, is the scheme’s lack of targeting. To lessen the effects of exorbitant energy prices, the program will pay £400 to every household electricity customer.
According to the OECD, more focused policies that help those who are most in need will reduce total state costs, better protect energy-saving incentives, and ease demand pressure during a period of high inflation.
According to official statistics, the impact of the mini-budget as well as rising prices caused the inflation rate to increase to 10.1% in September.
The OECD, which stated that risks to the UK economy are significant and “tipped towards the downside,” repeated several economic forecasts.
Due to rising energy prices and ongoing labor and supply constraints, inflation will reach a peak this year at around 10% before gradually decreasing to 2.7% by the end of 2024, according to the analysis.
The cost of the living problem is predicted to slow consumption, although this will be mitigated by a planned 9.7% increase in the minimum wage and the customary increase in social payments and pensions in April of the following year.
A warning was included in the study, stating that higher-than-anticipated costs for goods and energy could weigh on demand and further dampen GDP.
Likewise, a protracted time of a lack of labor could cause enterprises to permanently reduce their working capacity or drive up pay inflation.
reduction of energy use and net zero
There should be incentives for energy reduction even though the OECD stated that financial support measures are required to cope with high energy prices.
Additionally, the administration received criticism for its efforts to achieve net-zero emissions.
According to the report, the current measures are “not yet sufficient” to achieve the net-zero goal. In order to improve the UK’s energy security and lessen reliance on fossil fuels, it is essential to move closer to net zero.
By “being clearer about its approach to the transition to a net-zero economy and crafting an economy-wide plan with defined timetables, policies, and goals,” the government can encourage more investment.
