The UK faces a "stable, albeit slow" rate of expansion over the next six months, according to the Organisation for Economic Co-operation and Development (OECD), the "club" for the world's leading advanced economies.
The outlook will come as a disappointment for ministers, both because of their previous boasts about OECD backing for their policies and because the reality of lower growth will push government borrowing higher.
The OECD's "composite leading indicator" for Britain in March – comprising a wide variety of business surveys and other data – was once again flat, as it has been since last September, reflecting official data of an economy that has been essentially stagnant at best since last autumn, allowing for the effects of the poor weather over the winter.
Indeed, the UK enjoyed its best OECD growth ratings in February and March last year, before the General Election, challenging claims by the Chancellor, George Osborne, that the British economy had seen a resurgence in confidence since the Coalition came to power. While this may have been true of international investors – shown in negligible "risk premia" for UK gilts over German government bonds – as far as the British shopper is concerned there seems much to fear, with a marked decline in sentiment. The British Retail Consortium said like-for-like retail sales volume was up just 0.1 per cent in April compared with the same month in 2010, with the 5.2 per cent rise in value being due to inflation and, specifically, the VAT rise in January.
The OECD data suggests that the second and third-quarter growth figures for this year will be as subdued as the past six months.
By contrast, in the US and Germany the speed of recovery is seen spiking up, as it is in Russia, China and Canada. The UK joins France, Italy, Brazil and India in undergoing a slowdown or "stable" fortunes. Japan has been excluded from the latest OECD review.
The OECD's composite leading indicators are "designed to anticipate turning points in economic activity relative to trend" and point to further divergence across the world, suggesting "slower or stable" growth in most EU countries but continued expansion in North America, China and Russia.
The IMF recently forecast that the "Brics" would grow more than twice as quickly as the West.Reuse content