OECD cuts UK growth forecast

OECD cuts UK growth forecast - uk growth forecast — The OECD downgraded the UK’s growth outlook to 1 per cent for 2027.

The Organisation for Economic Cooperation and Development (OECD) has downgraded the UK’s growth outlook for 2027 to 1 per cent, dealing a fresh blow to Chancellor John Healey ahead of the Budget. The OECD had previously forecast 1.1 per cent growth for 2027.

The downgrade could add to the challenges facing the Chancellor, who is trying to rebuild Britain’s public finances and boost defence spending. The Office for Budget Responsibility (OBR) had projected 1.6 per cent growth for 2027 in March.

The OECD’s UK growth outlook for this year has been upgraded slightly, from 0.9 per cent to 1.1 per cent. However, this is still only half the pace of US growth, which is forecast to be 2.2 per cent.

The report also notes that the UK’s inflation forecast for this year has improved, with inflation expected to be 3.1 per cent, down from 3.7 per cent. However, this is still higher than every other G7 nation except the US.

The forecast for inflation next year has been increased from 2.4 per cent to 2.6 per cent. This could make it harder for the government to achieve its goal of easing the cost of living.

Chancellor John Healey is already facing challenges after worse than expected borrowing figures were released yesterday. The figures showed borrowing for the first five months of the financial year at £77 billion, £8 billion more than forecast by the OBR.

Chief Secretary to the Treasury Emma Reynolds said that despite the challenges, the UK economy is showing strong resilience. She noted that the government is giving families space to breathe and is starting to make long-term changes to create good jobs and growth.

Tory Shadow Chancellor Andrew Griffith said that the OECD’s downgrade is a sign that the government needs to do better. He urged the government to control spending and improve public sector efficiency, rather than trying to find new ways to tax people.

The OECD’s report notes that economic prospects remain heavily dependent on whether a durable resolution to the Middle East conflict is achieved. The report also predicts that newly-announced government support measures will keep Britain’s consumer economy ticking over this year and next.