The economic outlook for 2009 has been revised by the Organisation for Economic Cooperation and Development (OECD).

The organisation warns that the UK is in what it calls a ‘sharp recession’. The output is now set to contract 4.3% this year, as opposed to previous predictions of 3.7%.

It also predicts that there will be no growth in the UK economy in 2010 and that the UK budget deficit will hit 14% of GDP next year.

This forecast is worse than the Treasury made at the Budget, but many independent economic forecasters suggest the UK recession is bottoming out.

Worried About The UK’s Budget Deficit

The average prediction for independent economists is that UK economy will contract 3.7% in 2009, similar to the chancellor’s forecast of -3.5%.

The OECD’s particular worry is the size of the UK’s budget deficit: “public finances have deteriorated sharply… curtailing the possibilities for additional fiscal stimulus,” it says.

It adds that the UK is one of four countries where government borrowing is above 10% of GDP in 2010. It warns that, deficits need to be reined in as recovery takes hold, urging the government to develop a “concrete and comprehensive plan” ensuring debt is declining.

It believes that even if the UK reduces governmental borrowing by 1% of GDP a year for seven years, it will still have a gross debt-to-GDP ratio of 125% by 2017-one of the largest.

The Cause Of Political Disagreements

The OECD’s comments have caused political arguments to take place.

George Osborne, the country’s shadow chancellor says: “The OECD figures show just how deep Labour’s debt crisis is.

“The Projected record budget deficit is worse than the Treasury forecast, the worst in the developed world and double what it was when Dennis Healey had to go to the IMF.”

UK Economy One Of Worst Hit

The Chief Secretary to the Treasury, Liam Byrne however, had the following to say: “Britain had the space to fight back hard against the global downturn because we had lower debt than most G7 countries before the crisis broke.

“If we invest now we can stop the recession cutting long and deep.”

On the other hand, Liberal Democrat Treasury spokesman Vince Cable said: “there is no doubt that the UK economy has been one of the worst hit.

“What is particularly worrying is that the government seems to have no coherent plan to get the British economy back on course and the Budget back into place.”

World Recession ‘Nearing The Bottom’

The OECD is a little more optimistic about the world economy however as it believes the world economic recession is “nearing the bottom” after its sharp decrease in the six months before March.

It predicts a total fall of 4.1% this year, slightly better than the original -4.3% originally forecast.

Japan and Germany’s economies are expected to decline faster than the UK’s, but the OECD believes there are signs of strong growth in countries like the US and China.

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