Global economic growth will slump to below 2 per cent next year, posing “enormous risks” to a UK economy that is already weak, a leading United Nations economist forecast yesterday.

Heiner Flassbeck, the director of globalisation and development strategy at the United Nations Conference on Trade and Development (Unctad) said that, like the United States, Britain is in for a rough ride from a slowing global economy and a domestic housing crisis that will last for at least another year or two.

Mr Flassbeck said: “The pound may be dropping like a stone, but relief from devaluation only comes quite a bit later, especially after the UK’s shift from manufacturing to financial services over the past 15 years.”

Manufacturing industries are quicker to benefit from currency devaluations, which can quickly translate into cheaper exports. Unctad, which focuses on integrating emerging countries into the global economy, forecasts that the UK economy will grow by 1.6 per cent this year, barely half of the 3 per cent recorded in 2007. It did not give a forecast for next year.

Mr Flassbeck pointed out that 2 per cent growth would mean recession for many parts of the world, with Europe, Japan and the US particularly vulnerable. The 10 per cent growth that China is expected to record this year could easily fall, possibly to 8 per cent, in 2009, he said.

An Unctad report released yesterday forecast that the global economy would grow by 2.9 per cent this year, compared with 3.8 per cent in 2007 and the lowest since the 1.9 per cent recorded in 2002. The forecasts for next year were Mr Flassbeck’s own estimates and were not contained in the report.

Unctad said: “The financial turmoil that erupted in August 2007, the unprecedented oil price increases and the possibility of tighter monetary policy in a number of countries presage difficulties for the world economy in 2008 and 2009.

“The impact of the sub-prime crisis has spread well beyond the United States, causing a widespread squeeze in liquidity and credit. And price hikes in primary commodities, fuelled partly by speculation that has shifted from financial instruments to commodity markets, adds to the challenge for policymakers intent on avoiding a recession while at the same time keeping inflation under control.”

The report said that poorer countries should offer tax breaks and other incentives to support investment during the credit crisis. The agency gave warning that developing economies would be hit hard by a continuing global slowdown.

Commodity-producing countries in Africa and Latin America that have benefited from high prices for metals, minerals and energy products may also face pressure if demand for those raw exports cools, the report added.

Unctad, which is based in Geneva, was established in 1964. It conducts economic research and advises developing nations on policy matters.

— Ban Ki Moon, the United Nations Secretary-General, yesterday renewed his plea for greater efforts by the world community to meet flagging Millennium Development Goals aimed at drastically cutting global poverty. He said that delivery on commitments made by member states had fallen behind schedule. “We are running out of time,” he said.

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