The Organisation for Economic Co-operation and Development (OECD) revealed ahead of the Spring Statement on Tuesday that, contrary to the rest of the world, UK economic growth will continue to weaken this year and the next.
UK GDP is expected to rise by 1.3%, up from the 1.2% forecast in November but will do so at the slowest rate of all the other major economies. The OECD also projects a 1.1% growth in 2019.
In the US, the economy is forecast to grow by 2.9% in 2018 and 2.8% in 2019, and the average G20 growth will be of 4.1% this year and 4% next year.
The world economy will grow by 3.9% in 2018 and 2019, the Paris-based organisation predicted.
The OECD explained that in the UK, higher inflation – driven by the past depreciation of sterling – will continue to back household purchasing power, affecting consumer consumption.
While unemployment levels remain low, the OECD said this could change due to the slower economic growth.
However, an agreement about a transition period linked to the EU exit after March 2019 is expected to support growth over the next year.
Globally, stronger investment; the improvement in global trade; and higher employment are helping economies to recover from the financial crisis.
The report highlighted new tax reductions and spending increases in the US and additional fiscal stimulus in Germany as drivers for the upward revision to global growth prospects in 2018 and 2019.
Meanwhile, chancellor Philip Hammond said during his Spring Statement that the Office for Budget Responsibility expects GDP to grow 1.5% this year, and 1.3% in 2019 and 2020.
He added that inflation will fall to 2% in 2018, and borrowing in 2017-18 will decline to £45.2bn from the £49.9bn previously predicted.