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British economy to suffer biggest hit from energy crisis among G7, OECD finds

LABOUR slammed “12 years of Tory failures on energy and economic security” today after warnings that worker shortages and “untargeted” energy support will see Britain’s economy contract more than any other G7 nation.

The Organisation for Economic Co-operation and Development’s (OECD) latest forecast suggests the economy is expected to shrink by 0.4 per cent next year and grow by just 0.2 per cent in 2024.

Germany is the only other country in the richest group of nations that is set to suffer a hit to gross domestic product (GDP) next year, with a 0.3 per cent decline, according to a report from the intergovernmental organisation.

The body highlighted “acute labour shortages” after Brexit and workers choosing to retire during the Covid-19 pandemic.

It also blasted a move by Tory ministers to cap average annual energy bills at a record high of £2,500 until March, claiming assistance should have been more restricted.

Unions have warned that a failure by government to invest in home insulation, gas storage and renewable energy has left workers in Britain exposed to the devastating impact of international shocks, such as the war in Ukraine.

The OECD’s report said: “The untargeted energy price guarantee will increase pressure on already high inflation in the short term, requiring monetary policy to tighten more and raising debt service costs.

“Better targeting of measures to cushion the impact of high energy prices would lower the budgetary cost, better preserve incentives to save energy and reduce the pressure on demand at a time of high inflation” — code for keeping prices even higher in a bid to force reduced energy use.

Prime Minister Rishi Sunak’s official spokesman blamed “challenges that are affecting different countries at slightly different times” and said support from next April, when the cap is due to rise to £3,000, will be more “targeted”.

But shadow chief secretary to the Treasury Pat McFadden warned of a “Tory doom loop,” saying the figures are “yet more evidence of 12 years of economic failure.

“Next year we will have the lowest growth in the G20 bar Russia and we are forecast to be the only OECD economy that will be smaller in 2024 than it was in 2019.

“This is the Tory doom loop — a low-growth spiral leading to higher taxes, lower investment, squeezed wages and poor public services. And they have no plan to get us out of it.”

The Wolverhampton South MP claimed Labour has a “plan to grow the economy, with a modern industrial strategy that works in partnership with businesses and a green prosperity plan creating good jobs.”

The report came as Ofgem told 17 British energy suppliers to improve how they support vulnerable customers.

The energy regulator said that a review had also identified “severe weaknesses” at five suppliers: Good Energy, Outfox, SO Energy, Tru Energy and Utilita.

Ofgem’s director of retail Neil Lawrence said: “From eligible customers who are missing out on free gas safety checks through to companies not identifying vulnerable customers to be offered obvious support, this robust review has highlighted that suppliers need to do more to support consumers.”

The National Energy Action charity said the intervention is a “wake-up call.”

Director of policy Peter Smith said: “The current energy crisis is creating huge challenges for low-income and vulnerable consumers and worryingly, much colder weather is on its way.

“Energy suppliers have a key role in helping deliver vital direct assistance and signposting struggling customers to additional support.

“Key improvements need to be made to ensure vulnerable customers get the help they need at this very difficult time.”

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