UK economy to suffer biggest hit from energy crisis among G7 nations

Thermostat Concept piece to show the impact of rising costs of home energy bills for the poor is getting to critical point. Governments are already asking citizens to use less to avoid blackouts and providing economic stimulus cheques and hand outs to help people financially

Countries across the globe are battling the cost of living crisis – how does Britain fare in comparison? (Picture: Getty Images)

The UK economy will contract more than any of the world’s seven most advanced nations next year, a new report has found.

Britain is predicted to continue to suffer from painful inflation exacerbated by worker shortages and ‘untargeted’ energy support.

Gloomy forecasts from the Organisation for Economic Co-operation and Development (OECD) reveal a sharp downgrade for the country’s economy.

It is expected to shrink by 0.4% in 2023 and grow by just 0.2% in 2024.

In the new report, the OECD took aim at the UK Government’s support efforts to cap energy bills at around £2,500 until April.

Experts say doing so will push up inflation and mean households and businesses will be hit by higher interest rates as a result as policymakers look to rein in price and wage rises.

The OECD said: ‘The untargeted Energy Price Guarantee announced in September 2022 by the Government will increase pressure on already high inflation in the short term, requiring monetary policy to tighten more and raising debt service costs.

‘Better targeting of measures to cushion the impact of high energy prices would lower the budgetary cost, better-preserve incentives to save energy, and reduce the pressure on demand at a time of high inflation.’

Rishi Sunak recently met with G7 and Nato leaders in Bali (Picture: AP)

Germany is the only other G7 country set to see a contraction in gross domestic product (GDP) next year, with a 0.3% drop, according to the report.

Italy will see only paltry growth of 0.2%, while the United States will eke out 0.5% expansion, with GDP set to rise by 0.6% in France and 1% in Canada and 1.8% in Japan.

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Source:: Metro News

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