OECD Downgrades UK Growth Forecast as Energy Prices Bite

The Organisation for Economic Co-operation and Development (OECD) has released its latest forecasts on global economic growth, including a slower-than-expected performance in the UK next year. Despite a stronger-than-expected growth rate of 1.1% this year, driven by 'solid' domestic demand in the second quarter, the OECD predicts that growth will moderate to 1% in 2027.

The slowdown is attributed to recent increases in energy prices and higher interest rates, which are expected to drag on economic activity across Europe. The OECD also forecasts that UK inflation will be below previous estimates this year but will then take longer than expected to fall back to target levels.

Global growth remains resilient, however, with the OECD citing the AI boom as a key driver of support for global growth. Nevertheless, economists warn that any drop-off in investment or productivity would pose significant global risks.