UK predicted to have the slowest growth out of the wealthiest nations next year

Forecasts indicate that the UK economy will expand at the weakest rate among the major developed nations in 2019.

The UK gross domestic product, which is a crucial indicator of the state of the economy, is expected to increase by 1% in 2025, according to the Organisation for Economic Co-operation and Development (OECD).

Comparing this to the other G7 countries—Canada, France, Germany, Italy, Japan, and the United States—it is lower.

The UK economy will be "sluggish" this year, according to the OECD, a worldwide renowned think group.

The company attributed the sluggish performance to the fallout from a series of interest rate increases in the UK.

Additionally, it cautioned that consumers would be discouraged from investing if they were unsure of when the Bank of England would alter interest rates and if some aspects of inflation remained high.

The OECD had previously predicted 0.7% growth for the UK economy this year, but that prediction has been downgraded to 0.4% growth.

It stated that this year only Germany will experience reduced development.

The UK's tax revenues would "keep rising to historic highs" of almost 37% of GDP, according to OECD predictions.

Since the beginning of the year, the government has reduced National Insurance twice, for a total of 4% less. However, according to the OECD, this "only partially offsets the ongoing fiscal drag from frozen personal income tax thresholds".

Fiscal drag is the prospect of moving into a higher income tax bracket when a person's pay increases.

The UK was "winning the war" against inflation, according to Chancellor Jeremy Hunt, citing the OECD's projection.

Interest rates are controlled by the government-independent Bank of England, which also aims to maintain inflation at or around 2%.

The rate of price increases, or inflation, has decreased dramatically from a 40-year peak it hit in October 2022 to 3.2% in April.

Since late September, the interest rate has remained at 5.25%. The Bank is anticipated by the OECD to begin reducing interest rates this autumn.

(Sources: bbc.co.uk)