OECD Forecasts UK Economic Growth to Slow Down Next Year

The Organisation for Economic Co-operation and Development (OECD) has issued new forecasts that suggest UK economic growth will slow down next year. The OECD expects the UK to grow by less than 1% in 2027, which is weaker than the 1.4% reported last year. This comes despite a stronger-than-expected performance in 2026, when the economy grew by 1.1%, an upgrade from the previous estimate of 0.9%. The OECD attributed this growth to solid domestic demand in the second quarter of the year.

The OECD also expects inflation to be below previous forecasts this year but will then take longer than expected to fall back to target levels. UK consumer price inflation is on track to hit 3.1% for this year, significantly lower than the previous prediction of 3.6%. However, inflation is expected to slow to 2.6% next year.

The OECD's forecast comes ahead of the government's crucial Budget next month, when Chancellor John Healey seeks to find funding for Andy Burnham's pledges and plans for defence. Treasury Minister Emma Reynolds insisted that the UK economy is 'showing strong resilience' despite the ongoing war in Iran. She stated that the government will face these challenges together and are already giving families space to breathe.