Britain is at "significant risk" of a double dip recession according to the latest findings published by the Organisation for Economic Development and Co-operation. In its latest 'interim assessment report' the OECD has cut its expectations for growth among top Euro zone countries and the USA. The OECD forecasts that Europe's three largest economies (Germany, Britain and France) will contract by 0.4 per cent in that period as a whole - dragged down in particular by Germany.

The United Kingdom

The OECD does not specifically say that it is expecting negative growth in Britain . . . at least not yet! Britain will see a slowdown, which the OECD is estimating at 0.4 per cent annualised growth in the third quarter and 0.3 per cent in the final three months of the year. The quarter-on-quarter figures suggest that the OECD is forecasting quarterly growth of just 0.1 per cent for the UK in the third quarter of this year, falling to growth of 0.07 per cent in the final quarter. Based on these predictions, the UK economy would come to a virtual standstill in the second half of 2011. This is a significant downgrade from the 0.4 per cent quarter-on-quarter growth the OECD was forecasting in May. A senior economist and head of the UK desk at the OECD, commented on the predictions "the risk is significant" referring to economic contraction in the second half. "What we have seen is that data has been coming in measurably weaker than we expected, notably on the trade side. The support we expected from exports has vanished in the UK and that is mostly what has driven these downward revisions." In fact there have been almost five quarters of virtually no growth in the UK from the end of 2010. He added that "depressed market confidence over Eurozone fears, and a decline in consumer and business confidence had also taken their toll on the UK".

What about some of the other OECD countries

While the OECD says the risk of contraction has risen, it does not expect "a downturn of the magnitude of 2008/2009." Nevertheless, these figures clearly predict a sharp slowdown in the growth of many developed economies by the end of the year. The OECD expects Germany's economy to see the biggest hit, with annualised growth of 2.6 per cent, in the third quarter, before contracting by 1.4 per cent…

Unlock the rest of this article with a 14 day trial

Already have an account?
Login here