Economic thinktank the OECD has issued a warning over a recession in Europe, ahead of the Chancellor’s Autumn Statement tomorrow.
Concerns over sovereign debt sustainability are growing, and the Euro area is predicted to achieve negative growth in Q4 2011, and Q1, 2012, fulfilling the UK’s official definition of a recession.
Decisive policies are urgently needed to stop the Euro area sovereign debt crisis from spreading, the OECD claims. Commenting, OECD chief economist Pier Carlo Padoan said: “Prospects only improve if decisive action is taken quickly.”
While the OECD also warned that one negative event could have a ‘devastating outcome’, and send the entire western world into recession.
The statistics also suggest that the UK could be heading for a double dip recession, and GDP is at risk of shrinking back, with a prediction of just 0.5 per cent total growth in 2012.
According to the OECD, inflation in the UK is currently peaking, and is expected to fall below the two per cent target in 2013. Monetary policy is supporting the UK’s economy, according to the OECD, but more quantitative easing will be required.
The statistics come ahead of tomorrow’s Autumn Statement, and an update on the UK’s economic and fiscal outlook from the Office of Budget Responsibility (OBR).
