Underlining the risks facing the economy, the Organisation for Economic Co-operation and Development said yesterday that the UK would see the slowest growth among the world's major advanced economies over the next few months. It puts expansion at a very weak 0.25 per cent – close to a return to recession and slightly down on its previous predictions.
In contrast, the US is expected to expand by 0.9 per cent, followed by France and Germany at around 0.7.
The OECD further warns that world economic progress is threatened by unrest in the Middle East, the spiralling cost of oil and the continuing crisis in the eurozone. On balance, though, the OECD judges it "likely that the recovery is becoming self-sustained".
But Britain will lag behind. After a bounceback in the first quarter of this year, says the OECD, which should more than make up for the output lost to the snow in December, the British economy will slow markedly.
Last month the OECD slashed the UK's growth forecast for 2011 to 1.5 per cent from 1.7 per cent as the economy faces "significant headwinds" from spending cuts and rising commodity costs.
The OECD has previously backed the Chancellor's plan to reduce the budget deficit, and repeated yesterday: "The priority is to consolidate budgets and establish credible and growth-friendly medium-term plans."