In the wake of yesterday’s World Bank downgrade of global growth to 2.9%, yesterday's OECD announcement corroborates the downbeat sentiment, especially from the UK point of view.

The OECD predicts UK GDP will stagnate next year while inflation will peak at over 10% at the end of 2022 due to continuing labour and supply shortages and high energy prices, before gradually declining to 4.7% by the end of 2023.

READ MORE: Tories under pressure as OECD report says economy will grind to a halt next year

Private consumption is expected to slow as rising prices erode the purchasing power of wages and investment will weaken in 2022 as supply bottlenecks hamper investment.

However, the current tight labour market will keep unemployment low, which is important for the government’s tax income.

While much of this strife is caused by pandemic and international factors that are not controlled by Westminster, the politicisation of monetary policy and the drop in sterling’s value as a consequence of Brexit have some commentators talking about sterling’s resemblance to an emerging-market currency.

This is hyperbole but, from Scotland’s point of view, important – because Scotland uses sterling which has barely reacted to four interest rate rises since December.

It is important because the UK and Scotland import a lot of "stuff", especially when you include non-finished goods that are used as components in production processes.

The most recent UK trade data a UK had a trade deficit of £32.5 billion in the three months to March 2022 compared with a £6.2 billion deficit in the previous three months.

UK exports fell by 3.3% while imports increased by 11.9%.

Key to international trade is sterling’s ability to purchase dollars. Fewer dollars means dearer imports.

If this was balanced with increased investment in UK productive capacity such that demand for imports would fall, it would not present such a problem.

Investment, like so much of economics, relies on the confidence that investors have in the UK Government’s economic policies impeded by Brexit, ongoing issues in Ukraine and China, and the Bank of England’s ability to manage UK finances.

However, the OECD has highlighted the relatively precarious nature of the UK economy and investors might find more stable environments in which to invest, depriving the UK of the cash required to generate increased productive capacity which would, in turn, lead to less reliance on imports.

Indeed, it’s not beyond the bounds of possibility that, as inflation continues to stalk consumers’ daily lives, interest rates will be hiked even higher than the OECD’s 2.5% prediction, making borrowing to invest even more expensive.

As part of the UK, Scotland has to live within sterling’s means and hope that the World Bank, the OECD and the international investment community are wrong and the UK Government can effectively manage the situation.

Unfortunately, there was precious little mention of hope in the OECD’s assessment of the UK.