The UK economy is expected to slip into recession this year, the Organisation for Economic Cooperation and Development (OECD) has warned.

The thinktank estimates the economy will shrink by 0.3% in the third quarter of 2008 and 0.4% in the final three months, meeting the definition of a recession as two quarters of negative growth.

The body identified the downturn in the housing market and reduced credit supply as the two biggest barriers to growth in the UK, while increases in food and fuel prices had hit consumer spending.

But it also offered a more positive assessment on inflation, predicting that commodity prices would continue to fall back from their recent record highs.