UK Economy Set to Slow Down Next Year Amid Global Shocks
The Organisation for Economic Co-operation and Development (OECD) has released its latest economic forecast, predicting that UK growth will slow down next year. The Paris-based think tank expects GDP growth to slip from 1.1% this year to 1% in 2024.
The slowdown is attributed to international friction and energy markets. Conflicts in the Middle East and ongoing instability tied to the war in Iran have kept oil and gas prices volatile, leading to higher energy bills in the UK.
High policy interest rates and stubborn energy costs are also taking a bite out of consumer activity. The OECD notes that while domestic demand was solid in the second quarter of this year, higher borrowing costs are acting as a brake on both business investment and household spending.
Inflation is another concern, refusing to clear the room quickly. While the OECD cut its UK inflation forecast for this year down to 3.1%, it warned that price growth will take longer to drop back to target levels. The Bank of England has cautioned that inflation could peak closer to 4% in early 2027.