OECD Downgrades UK Growth Forecast Amid Higher Energy Prices and Interest Rates
The Organisation for Economic Co-operation and Development (OECD) has downgraded its forecast for UK economic growth in 2027, predicting a 1% expansion. This is a decrease from the previous forecast of 1.1%. The OECD cited higher energy prices, interest rates, and global uncertainty as contributing factors.
The Bank of England's interest rate is expected to fall from 3.75% to 3.5% in 2027 as inflationary pressures ease. However, the OECD still expects UK inflation to remain above target at 2.6%, up from its previous forecast of 2.4%. This could lead to a difficult balancing act for the Bank of England.
The OECD's global outlook also highlighted the importance of artificial intelligence in driving economic growth, but warned that the investment boom carries significant risks if productivity outcomes fail to meet expectations.