Slowdowns 'are threat to whole world economy'

Fears for the world's powerhouse economies grew today as a major report warned that Germany is in danger of going into reverse while America faces a slowdown.

Britain will grow by a meagre 0.4 and 0.3 per cent in the final two quarters of this year, predicted the respected Paris-based think tank, the Organisation for Economic Cooperation and Development.

But alarm bells were ringing that some of the countries on which UK firms depend for trade are heading for a serious slowdown by the end of the year.

"With respect to three months back the growth scenario looks much worse, one would say growth is stagnating," said OECD chief economist Pier Carlo Padoan. "We are witnessing a growth slowdown across OECD countries."

The OECD blames belt-tightening across the world and falling confidence for the disappointing signals.

The German economy could contract by 1.4 per cent between next month and December despite strong growth in the summer, it said.

Official German data has shown that the country's exports fell by 1.8 per cent in July, much more than expected.

For the US, the OECD predicted growth of 1.1 per cent in the third quarter, slowing to 0.4 per cent in the fourth. It estimated that growth across the G7 nations as a whole would be 1.6 per cent in July to September, falling to 0.2 per cent between next month and December.

The organisation said there were huge uncertainties surrounding all its estimates. Its German forecast, for example, could prove out by up to 2.1 percentage points.

Although the OECD said it did not expect a repeat of the 2009 slump, the interim report set alarm bells ringing that the recovery will take years.

Ed Balls, Labour's shadow chancellor, spoke of the risks of a "disaster" in the US and a "catastrophe" in the European Union's eurozone if political leaders failed to agree a credible plan to turn around their economies.

He urged Chancellor George Osborne to take a lead by adopting a "plan B" for the British economy, to stimulate growth.

The Coalition is divided over calls to scrap the 50p top rate of tax to encourage growth. The Bank of England held interest rates today at 0.5 per cent.