The UK is set to suffer the biggest economic hit in the G20 from the war in the Middle East, according to the Organisation for Economic Co-operation and Development.
Economists at the OECD have said the ongoing conflict threatens to bring the UK to the cusp of a recession.
New forecasts show the UK will take the largest hit to growth of all the G20 nations and see the biggest rise in inflation among the rich countries, The Times reports.
The ECD’s interim economic outlook has slashed the expected GDP growth to just 0.7%, down half a percentage point from its previous prediction of 1.2%.
The change in forecast would leave the UK second last in the G7 growth table and become the biggest growth projection downgrade in the G20.
Meanwhile inflation is now forecast to average 4% across this year, a steep rise from the 2.5% the OECD predicted in December.
At double the Bank of England's target 2% rate, it would also be the second highest in the G7 and the largest increase among the group of rich economies.
OECD analysts warned growth could be damaged even further should there be another “unexpected sharp increase in energy prices” pushing oil and gas prices up further and potentially knocking another 0.4% off European growth this year and nearly 0.8% next year.
If realised, The Times reports such a scenario would push Europe’s largest economies, including the UK, to within a whisker of a recession, defined as two consecutive quarters of contraction.
Enforced cutbacks on energy consumption due to shortages would magnify the “downside effects on growth”, the OECD said.
FSTE100
The UK's flagship share index, the FTSE 100, was down 80 points at 9,958 shortly after opening this morning.
Brent crude oil futures were up 2.70% at $109.29 a barrel.
Companies reporting today