OECD Bolsters UK Growth Forecast for 2026 Amid Caution on 2027

The Organisation for Economic Co-operation and Development (OECD) has raised its growth forecast for the UK in 2026, citing solid demand in the second quarter that held up despite higher fuel prices. The think tank lifted its growth estimate to 1.1% from 0.9%, which is in line with more cautious forecasters such as HSBC.

The OECD's revised growth figure contrasts with Deutsche Bank's prediction of 2027 growth at 1.4%. In contrast, the OECD trimmed its 2027 projection down to 1% from 1.1%, blaming the drag from higher interest rates over the coming year.

The OECD was more upbeat on inflation than the Bank of England, forecasting an average of 3.1% this year, below its earlier 3.6% call, easing to 2.6% in 2027. This outlook offers a mixed backdrop for Chancellor John Healey ahead of his Budget.