Chancellor Jeremy Hunt said the OECD’s forecast showed the UK was “winning the war” against inflation.

“This forecast is not particularly surprising given our priority for the last year has been to tackle inflation with higher interest rates”, he wrote, adding that “growth matters”.

But Darren Jones, Labour’s shadow chief secretary to the Treasury, said: “Today’s news that growth has been downgraded again reminds the British people what they already know: after 14 years of failure, the Conservatives cannot fix the economy because they are the reason it is broken.”

Meanwhile, the Liberal Democrats accused the government of being “economically illiterate”.

“Their no-growth policies have left the public enduring sky-high mortgage rates, the price of a weekly shop going through the roof, and stealth taxes hammering both pensioners and working people,” said Liberal Democrat Treasury spokesperson, Sarah Olney.

The Bank of England, which is independent from the government, sets interest rates and has a target to keep inflation at or close to 2%.

Inflation – which measures the pace of price rises – has slowed significantly from a 40-year high it reached in October 2022 to 3.2% in April.

Interest rates have been held at 5.25% since last September. The OECD expects the Bank to start cutting borrowing costs from this autumn.

The think tank predicted that interest rates could fall to 3.75% by the end of next year.

The forecasts aim to give a guide to what is most likely to happen in the future, but can be incorrect and do change.

They are used by businesses to help plan investments, and by governments to guide policy decisions.