Britain's economy will fall back into recession according to a forecast from the OECD.
Unemployment will rise and weak demand for exports coupled with the government's cuts will hurt growth in the fourth quarter of 2011 and the first of 2012, according to the economic think-tank.
But despite the gloomy double-dip prediction the OECD said the recession will be "mild" and said the government policy had “bolstered credibility and helped maintain low bond yields”.
The OECD's chief economist Pier Carlo Padoan said the ongoing eurozone crisis was a "key risk to the world economy".
Chancellor George Osborne, reacting to the figures on Monday morning said he believed the public were still behind the coalition's austerity measures despite the predictions: "They have had enough of politicians who think there is a quick-fix solution, who say you can borrow a bit more to get us out of debt. As a result, actually I think the public is behind what the Government is doing."
But shadow chancellor Ed Balls said the forecasts would concern "hard-pressed families and pensioners".
"They suggest our economy will continue to flatline, or worse, well into next year and that unemployment will rise even higher. And with our recovery choked off over twelve months ago, they show that the UK will grow more slowly than the eurozone or the USA this year.
“The OECD remains diplomatic in its language, but both the OECD and the IMF were clear this summer that if the economy continues to underperform with slow growth then the pace of spending cuts and tax rises should be slowed down to support the economy. "
The OECD's forecast comes ahead of Osborne's Autumn Statement tomorrow, where he expected to announce a boost in infrastructure funding and other measures to help increase growth.
Suggested For You
SUBSCRIBE AND FOLLOW
Get top stories and blog posts emailed to me each day. Newsletters may offer personalized content or advertisements.Learn more