Grim new forecasts from the Organisation for Economic Co-operation and Development (OECD) show the UK is now set for the weakest economic growth in the developed world next year, with no GDP growth at all throughout 2023. A worse projection than for any other OECD member – only Russia is expected to perform worse among the G20:The report also has choice words for Rishi, urging him to “consider slowing fiscal consolidation to support growth” and warning that the UK is unique in grappling with high inflation and rising interest rates whilst also whacking up increasing taxes:

“Inflation is high compared with other OECD countries in the G20 . . . that’s one thing. The other thing is there is fast monetary tightening which is obviously responding to [the inflation] and there is fiscal consolidation which is the highest in the G7.”

The Treasury wearily points out that on the other hand the IMF said only a matter of months ago that Rishi should be raising taxes to stem rising inflation, so the international economic institutions are a bit muddled when it comes to what to do to stop rising inflation. The Treasury argues that a looser fiscal policy would only make inflation worse. As for OECD/IMF forecasts they’re sceptical that it will play out as predicted, pointing out that OECD is at the most pessimistic end of forecasters, with the average forecaster expecting growth above 1%. Nevertheless, perhaps a fiscal consolidation that reduces spending to match tax revenues rather than increases taxes to match spending, might be a more growth friendly way of balancing the books…