The Organization for Economic Cooperation and Development predicted the U.K. economy will contract this year as it cut its forecast because of the persistence of the euro-region crisis.
Gross domestic product will shrink 0.7 percent this year instead of the previously predicted expansion of 0.5 percent, the OECD said in a report published today. The forecast doesn’t account for likely growth shifts following the additional Diamond Jubilee bank holiday in June or the London Olympic Games last month, the Paris-based organization said.
Prime Minister David Cameron this week pledged to stick to his fiscal squeeze as he reorganized his government after a deepening recession hurt poll ratings. The continuing turmoil in the euro area is sapping demand for exports, while budget cuts are hurting confidence at home.
“The loss of momentum at the Group of Seven level may persist throughout the latter half of this year, with the recession in the euro area and associated trade and confidence headwinds enduring,” the OECD said.
-- Editors: Craig Stirling, Simone Meier
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