LONDON – Britain will have the highest inflation of any leading economy in 2023, according to forecasts from the Organization for Economic Cooperation and Development which show Prime Minister Rishi Sunak will miss his promise to halve price growth this year.
Britain’s headline inflation rate was set to hit 6.9 percent in 2023, higher than Germany’s 6.3 percent and France’s 6.1 percent and the OECD average of 6.6 percent, the group said in a new set of projections on its members’ economies published on Wednesday.
If correct, the forecast would mean Sunak will miss his target of halving inflation this year, one of the priorities he set out for voters before a national election expected in 2024.
However, the OECD said it expected British inflation to slow to 2.8 percent in 2024, lower than in France and Germany.
Britain’s stubbornly high inflation rate has intensified expectations that the Bank of England will continue to increase borrowing costs, potentially pushing the economy into a recession which it has so far dodged.
Finance minister Jeremy Hunt pointed to improved forecasts from the OECD for the economy which it now expected to grow by 0.3 percent in 2023 and 1 percent in 2024.
Previously the OECD had expected the economy to shrink by 0.2 percent this year and grow by 0.9 percent next year.
“Today’s report boosts our growth forecast, praises our action to help parents back to work with a major expansion of free childcare, and recognizes our cuts to business taxes which aim to drive investment,” Hunt said in a statement.
“But while inflation is still too high, we must stick relentlessly to our plan to halve it this year. That is the only long term way to grow the economy and ease the cost of living pressures on families.”