OECD says Britain in worst decline since 1945
According to the Organisation for Economic Co-operation and Development (OECD), Britain is heading for the worst economic downturn since the end of the Second World War, and the organisation has drastically cut forecasts as the signs for recovery are poor.
The OECD forecasts are that UK GDP would fall by 3.7 percent by the end of 2009, which is more than treble the original 1.1 percent November forecast.
As many analysts have noted, the UK economy is unlikely to recover within 2009 and there are also revised forecasts for 2010.
The rate cuts and the government stimulus packages, coupled with the weak pound, has meant that moderate recovery is being predicted for 2010. However, just last week Mervyn King announced that the Bank of England cannot afford another stimulus package.
This follows on from the International Monetary Fund announcement that developing economies are likely to shrink by 3 to 3.5 percent in 2009, whilst the World Bank has forecast that, due to the record falls in trade, the global economy is likely to shrink by up to 1.7 percent.
The revisions have come as a result of a fall in the economic growth of both China and India.
Although both nations are still growing, it seems as though the reduction in world trade has affected growth. China’s growth forecasts have been cut from 7.5 percent to 6.5 percent, although the government has reiterated that growth is still at the forefront on policy and decision making.