UK economic growth to moderate next year - OECD
By Abigail Townsend
Date: Tuesday 02 Dec 2025
(Sharecast News) - Economic growth is set to slow in the UK next year, an influential think tank forecast on Tuesday, weighed down by the impact of tax rises on consumption.
According to the latest global economic outlook from the Paris-based Organization for Economic Co-operation and Development, the UK economy will grow by 1.2% in 2026, down from its forecast 1.4% this year.
It is then expected to tick up again, to 1.3% in 2027.
The OECD attributed the likely slower rate of growth in 2026 to the "continued effect of budgetary tightening on consumption and to the drag from global uncertainty".
The 2026 forecast is comfortably below that for the G20 as a whole, of 2.9%.
However, the UK is predicted to grow at a quicker pace than a number of European economies, including France and Germany. The OECD expects both to growth by 1%. Outside of Europe, the OECD is predicting the US will grow by 1.7%, and China by 4.4% next year.
In the UK, inflation is forecast to peak at 2.5% next year before falling to 2.1% in 2027.
The consumer price index currently stands at 3.6%, comfortably ahead of the Bank of England's long-term target of 2%.
The OECD said: "The monetary policy stance is expected to become neutral as the easing cycle ends.
"At the same time, fiscal policy will remain restrictive given high government borrowing costs, as well as large, albeit declining, budget deficits and rising public debt.
"Continuing to ensure that consolidation is carefully timed, given substantial risks to growth and upside risks to inflation, and well calibrated, with a combination of revenue-raising measures and spending cuts, is essential."
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN