Recession fears continued to haunt the UK economy today as the Organisation for Economic Co-operation and Development (OECD) slashed its output forecast for 2012.
The Paris-based body cut its prediction from the 0.5 per cent growth it predicted in May to a contraction of 0.7 per cent. It follows a string of downgrades from business groups and forecasting organisations as the economy continues to falter.
The OECD revision is greater than for any other major economy, including Italy.
Meanwhile, the organisation forecast 2012 growth of 1.4 per cent for the Group of Seven (G7) economies as a whole.
The outlook for major developed economies has darkened in recent months as the eurozone crisis has spread to the region’s core, the OECD noted.
The OECD forecast 2.3 per cent growth in 2012 for the United States, down slightly from an estimate of 2.4 per cent in May.
It cut its forecast more sharply for eurozone powerhouse Germany, to 0.8 per cent from 1.2 per cent.
OECD chief economist Pier Carlo Padoan said: “The euro area remains a crucial point, the epicentre of the crisis.”
Setting out its latest economic projections, the British Chambers of Commerce last month forecast a 0.4 per cent contraction in UK output in 2012, well down on the 0.1 per cent growth cited previously. That compares with the Bank of England’s recent forecast for no growth this year.