In a forecast more negative than the one produced six months ago, the OECD said weakening property markets, a global credit crisis and high commodity costs will slow UK growth to 1.8% this year, and to 1.4% next year while US growth will be at a virtual standstill.

Conditions in the euro area, which accounts for two thirds of UK trade, are expected to get worse as the full effects of the credit crunch take hold. The report suggest the eurozone economy will grow by 1.7% in 2008 and 1.4% in 2009

High energy and commodity prices are posing a dilemma for the world's central banks and make it more difficult for them to take appropriate action to deal with the economic slowdown.

However, despite the problems, the OECD says it thinks that the worst phase of the global credit crisis may have passed after central banks pumped billions of dollars into the banking system.