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The UK economy is set to experience a significant "down-swing", new world financial research has suggested.
The Organisation of Economic Cooperation and Development’s half-yearly outlook has dampened any hope of an upturn it predicted growth at 1.8 per cent this year, falling to 1.4 per cent in 2009.
The UK is not alone in experiencing difficult conditions. Jørgen Elmeskov, acting head of economics, said weak growth was expected in several countries.
"Euro area activity is restrained through the current year by tighter credit, squeezed real incomes, lower export market growth and market share losses," he commented.
Mr Elmeskov advised the Bank of England to leave "policy interest rates on hold in the short term, in order to ensure that high inflation expectations do not become embedded".
He went on to say some further easing in policy rates would be likely. His views were backed by a recent poll of eight leading financial experts for Adfero.
Zoe Stevens at Nationwide said there was a strong probability rates would be frozen: "We believe there is an 80 per cent chance of no change, and a 20 per cent chance of a 0.25 per cent decrease in rates."