OECD slashes UK growth prediction

(Sharecast) The coalition-created Office for Budget Responsibility (OBR) has seen further doubt cast on its predictions on the UK's economic growth next year.

The Organisation for Economic Cooperation and Development (OECD) has slashed its growth forecast for the UK to 1.7 percent for 2011, down from a previous estimate of 2.5 percent.

The figure is sharply lower than the OBR's prediction of a 2.3 percent expansion. Earlier this week the Institute of Directors (IoD) slashed its forecasts on growth in 2011 to 1.2 percent from a previous estimate of 1.8 percent.

Like the IoD, the OECD thinks that the pace of recent strong growth in the UK economy will slow as government cuts take effect.

‘GDP growth in the first three quarters of 2010 was robust, reflecting broad-based growth in domestic demand, including from a needed rebuilding of inventories,' the OECD said.

‘The pace is set to slow, however, as contributions from stock-building fade and fiscal consolidation creates increasing headwinds.'