OECD Warns UK to Tighten Spending as Growth Slows Amid Rising Inflation

The Organisation for Economic Co-operation and Development (OECD) has urged the UK government to tighten its spending as growth slows. Inflation is expected to average 3.1% this year, remaining above the 2% target.

The OECD warned that advanced economies need to rein in spending, raise public sector efficiency, and strengthen revenues to keep debt sustainable over time.

According to the OECD, the Bank of England can keep inflation in check by holding rates steady until next year before trimming them by a quarter point. Market pressure points are clear, with Britain's 30-year bond yields topping every other G7 country's, and national debt sitting at 93.8% of GDP.

The UK government is expected to raise taxes to repair public finances ahead of the Oct. 28 budget. Chancellor of the Exchequer John Healey will likely make policy tweaks to support consumption and growth, with a focus on households most in need.