UK economy will get worse

The UK could face more financial despair if it doesn’t get a helping hand, the Organisation for Economic Cooperation and Development (OECD) has said.

The warning comes as the organisation slashed its previous forecast of an economic decline of 0.5 percent to 0.7 percent, which it blamed on the Eurozone, claiming that this could have a bigger impact than previously predicted on UK trade and business.

It also said the current Government’s austerity programme was hindering the economy – acting as a “drag” rather than a help, claiming that more stimulus was needed here and in Europe to boost the falling figures.

And it wasn’t better news for the rest of Europe with the organisation claiming that its economic outlook ha weakened significantly since last spring.

It added that  Germany, France and Italy  will shrink at an annualised rate of one percent on average during the third quarter and at 0.7 percent in the fourth.

Individually, the German economy is expected to contract at an annualised rate of 0.5 percent in the third quarter and at 0.8 percent in the fourth.

The French outlook is slightly better, with contraction at an annualised rate of 0.4 percent in the third quarter followed by a slight pick up in growth at 0.2 percent in the fourth.

In Italy, the deep recession will continue with contraction at an annualised rate of 2.9 percent in the third quarter and 1.4 percent in the fourth.

Chief Economist Pier Carlo Padoan said: “The slowdown will persist if leaders fail to address the main cause of this deterioration, which is the continuing crisis in the Euro area.”

He added that the weak growth outlook is expected to push unemployment beyond today’s already high levels.

“Resolving the Euro area’s banking, fiscal and competitiveness problems is still the key to recovery,” he said.