BRITAIN'S growth forecast has been cut by the OECD international watchdog, which warned that the world economy was "stuck in low gear".

Although there is a slight downgrade for 2014 from 3.1 per cent to 3.0 per cent, this still leaves the UK with the fastest growth of any major advanced economy this year.

However, the growth forecast for next year was also scaled back by 0.1 per cent, to 2.7 per cent, which means the US remains set to lead the recovery race in 2015.

In its latest economic outlook, the Organisation for Economic Co-operation and Development said world trade and investment growth were underperforming.

"We are far from being on the road to a healthy recovery," declared Angel Gurria, its secretary general, saying: "There is a growing risk of stagnation in the euro zone that could have impacts worldwide, while Japan has fallen into a technical recession."

The watchdog said the GDP outlook together with high unemployment "should spur governments with a greater sense of urgency to fully employ monetary, fiscal and structural policy levers to support growth, notably in Europe".

Catherine Mann, the OECD's chief economist, said more action would be needed from the European Central Bank, which is under pressure to expand stimulus by buying government bonds.

"A Europe that is doing poorly is bad news for everyone," she insisted.

Meanwhile, the watchdog report said UK growth was "set to continue at a strong, if slightly easing pace" despite the squeeze on public spending. It said expansion had been propelled by high job creation and it would be sustained by "robust private consumption and investment" next year and in 2016 when GDP is expected to grow by 2.5%.

Business investment had continued to recover strongly as uncertainty fades, but low wage growth, plus cooling house-buying activity and lower oil and gas revenues have hit tax receipts, pushing the current account deficit close to 5% of GDP, the report said.

Chancellor George Osborne said: "Today's economic outlook by the OECD provides further evidence that the Government's long-term economic plan is working, with the UK expected to grow faster than any other major advanced economy.

"But the report also highlights the growing external threat that the UK faces, which is why we must continue to work through the plan."