The UK’s economic growth forecast has been downgraded by the Organisation for Economic Cooperation and Development (OECD), which has urged global leaders to de-escalate rising trade tensions.
According to the OECD’s latest projections, the UK’s GDP growth is expected to reach 1.4 per cent this year—0.3 percentage points lower than previously forecast—while 2026 growth has been revised down to 1.2 per cent. Inflation expectations remain unchanged at 2.7 per cent for this year and 2.3 per cent in 2026.
Despite the downgrade, Britain is set to be the second-fastest growing economy in the G7, behind only the United States. However, the figures present a challenge for Chancellor Rachel Reeves ahead of the upcoming spring statement, as she faces mounting pressure to meet fiscal targets without resorting to significant spending cuts.
The OECD attributes the slowdown to global trade uncertainties and inflationary pressures, which are expected to keep UK interest rates at 4 per cent until late 2026. The Bank of England’s base rate currently stands at 4.5 per cent.
Reeves responded to the report by highlighting the government’s commitment to economic stability, stating: “This report shows the world is changing, and increased global headwinds such as trade uncertainty are being felt across the board. A changing world means Britain must change too, and we are delivering a new era of stability, security and renewal, to protect working people and keep our country safe.”
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