UK Growth Expected to Slow Next Year Amid Energy Price Concerns

The Organisation for Economic Co-operation and Development (OECD) has released new forecasts that indicate UK economic growth will slow next year. The organisation reports that the UK economy is expected to have grown by 1.1% this year, up from a previous estimate of 0.9%. This growth is attributed to 'solid' domestic demand in the second quarter and newly announced government support measures.

However, growth is still expected to be weaker than the 1.4% reported last year and will dip slightly next year, according to the OECD. The organisation cites recent increases in energy prices and higher policy rates as factors contributing to slower growth across Europe.

The OECD also predicts that UK consumer price inflation will be lower than previously forecasted this year, at 3.1%, but will take longer than expected to fall back to target levels. Inflation is expected to slow to 2.6% next year, which is a shallower drop than previously anticipated.

According to the OECD, global growth was resilient in many countries during 2026 despite the impact of the war in Iran. However, recent rises in energy prices linked to the prolonged conflict are likely to cause more inflation in the near term before gradually easing next year.