OECD Downgrades UK Growth Forecast as Energy Prices Bite

The Organisation for Economic Co-operation and Development (OECD) has downgraded its forecast for UK economic growth in 2027, citing a slower-than-expected pace of expansion next year. The organization's new projections show that the UK economy is expected to grow by 1% in 2027, down from an earlier estimate of 1.1%. This represents a significant slowdown compared to 2026, when the UK economy grew by 1.4%, according to the OECD.

The OECD attributes the slower growth to recent rises in energy prices linked to the prolonged conflict in the Middle East. These price increases are expected to cause more inflation in the near term, before gradually easing next year. As a result, the organization now expects UK inflation to slow to 2.6% in 2027, rather than the previously forecasted 2.4%.

Despite these downgrades, the OECD notes that the global economy has shown resilience in many countries during 2026, with growth remaining strong despite the impact of the war in Iran. The organization also highlights the importance of central banks acting to control inflationary pressures if they sharpen.