The global economy is at risk of falling into a 1970s-style stagflation trap, the World Bank has warned.

The bank has slashed its growth forecasts and raised the alarm over growing sovereign debt defaults.

World Bank president David Malpass said: "The war in Ukraine, lockdowns in China, supply-chain disruptions, and the risk of stagflation are hammering growth.

"For many countries, recession will be hard to avoid. Markets look forward, so it is urgent to encourage production and avoid trade restrictions. Changes in fiscal, monetary, climate and debt policy are needed to counter capital misallocation and inequality."

In the World Bank's latest Global Economic Prospects report it says the risk of stagflation has potentially harmful consequences for middle- and low-income economies alike.

"Compounding the damage from the COVID-19 pandemic, the Russian invasion of Ukraine has magnified the slowdown in the global economy, which is entering what could become a protracted period of feeble growth and elevated inflation," the report said.

Global growth is expected to slump from 5.7 percent in 2021 to 2.9 percent in 2022— significantly lower than 4.1 percent that was anticipated in January.

It is expected to hover around that pace over 2023-24, as the war in Ukraine disrupts activity, investment, and trade in the near term, pent-up demand fades, and fiscal and monetary policy accommodation is withdrawn.

As a result of the damage from the pandemic and the war, the level of per capita income in developing economies this year will be nearly 5 percent below its pre-pandemic trend, it says.

There was more gloomy news as new data showed retail sales slipped last month as Brits tightened their belts amid the cost-of-living crisis.

Total retail sales fell by 1.1 per cent in May, according to the latest monthly BRC-KPMG retail sales monitor.

It represents a slowdown in shopping activity following an average growth of 0.7 per cent over the past three months.

Like-for-like sales were down 1.5 per cent for May compared with the same month a year earlier. Sales figures are not adjusted for rising price inflation, meaning sales volumes are expected to show a much sharper decline.

Punchline says:: "Here in Gloucestershire we've been through floods, recessions, Covid and now we are facing a perfect storm with rising prices. The business community needs to stick together and buy from each other.

"What business needs is stability and certainty, for the politicians to stop infighting and find the solutions. The government needs to draw a line in the sand and move on."

What do you think? Email mark@moosemarketingandpr.co.uk