The OECD has revised downward its global growth forecasts, highlighting challenges posed by trade tensions and economic uncertainties, particularly impacting the UK. The UK economy is now projected to grow just 1.3% in 2025, down from 1.4%, and it's expected to fall further to 1% in 2026. Factors like inflation, weak business sentiment, and flat consumer confidence contribute to these projections. The OECD has urged the Chancellor to enhance tax revenues given the 'thin fiscal buffers' that hinder the UK's ability to respond to potential economic shocks.
The OECD has lowered the UK economic growth forecast for 2026 from 1.2% to 1% due to heightened trade tensions and elevated uncertainty.
OECD economists warned the global economic outlook is 'becoming increasingly challenging' with the UK economy facing substantial downside risks to growth.
Inflationary pressures will linger initially due to higher import prices, but are expected to subside by 2026 as the labour market loosens.
The OECD states that current fiscal buffers are thin, raising concerns about the UK's ability to provide support during economic shocks.
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