OECD Predicts Britain's Economy to Slow in 2027 Amid Energy Price Shocks

Britain's economy is expected to slow down in 2027 after showing resilience and better-than-expected growth this year. According to the Organisation for Economic Co-operation and Development (OECD), the UK economy will grow by 1.1% in 2026, up from an initial prediction of 0.9%. Inflation is also expected to average 3.1% this year, lower than previously predicted at 3.6%, but still higher than most G7 countries.

The OECD forecasts the UK economy will slow down to 1% growth in 2027 due to ongoing energy price shocks from the Middle East war. This is faster than France, Italy, and Japan, but slower than Germany and Canada. The UK's inflation rate jumped to a five-month high of 3.1% last month, with the Bank of England predicting it could hit 3.75% by year-end and peak at around 4% in early 2027.

UK Chancellor John Healey faces a tough task in balancing economic growth with raising taxes to tackle public spending and debt. Treasury minister Emma Reynolds said the UK economy is showing strong resilience despite global pressures, but critics argue that US President Donald Trump's actions have fuelled inflation worldwide.