UK economy will grow by less than expected next year, OECD says — SkimNews
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- OECD downgraded its UK 2027 growth forecast to 1.0%, down from the 1.1% it predicted in June.
- OECD upgraded its UK 2026 growth forecast to 1.1%, up from a prior 0.9%, citing 'solid domestic demand growth' since its last assessment.
- Higher fuel prices stemming from the Middle East conflict are eating into UK growth in 2027, with the OECD noting the hit's depth depends on how long supply disruptions last.
- Chancellor John Healey is preparing to deliver his first Budget at the end of October against this revised outlook.
- Global growth next year is expected to be 0.1 percentage point lower than previously forecast, with the OECD flagging impacts across Australia, Canada, and the Euro-area.
- Climate-related supply shocks, including a strong El Nino, could hit farmers and push up food prices alongside the Middle East-driven rise in oil and gas inflation.
Why it matters: The OECD cut its 2027 UK growth call by just 0.1 percentage point to 1.0%, leaving Chancellor John Healey with a marginally weaker backdrop for his first Budget at month's end. The downgrade hinges entirely on Middle East-driven fuel prices, with the OECD explicitly tying the magnitude of the hit to how long supply disruptions persist.
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