UK Economy Set to Slow Down Despite Stronger-Than-Expected Growth

The UK economy is expected to slow down next year despite showing stronger-than-expected growth in 2026, according to new forecasts from the Organisation for Economic Co-operation and Development (OECD).

The OECD predicts that the UK's economic growth will be 1.1 per cent this year, an upgrade from its previous estimate of 0.9 per cent growth in June. This is due to solid domestic demand in the second quarter of the year, as well as newly announced government support measures such as the removal of VAT from household energy bills from October.

However, growth is still expected to be weaker than the 1.4 per cent reported last year and will dip slightly next year. Meanwhile, UK consumer price inflation is on track to hit 3.1 per cent for this year, significantly lower than the previous prediction of 3.6 per cent.

The OECD also expects inflation to slow to 2.6 per cent next year, which is a shallower drop than previously expected. This is despite recent rises in energy prices linked to the prolonged Iran war, which are likely to cause more inflation in the near term before gradually easing next year.