OECD cuts UK growth forecast amid economic uncertainties

The Organisation of Economic Cooperation and Development (OECD) has downgraded its forecasts for the UK economy due to rising trade uncertainties, high interest rates, and decreasing confidence among businesses. The new expectation for growth this year is set at 1.3%, a reduction from the earlier forecast of 1.4%. This economic outlook reflects an atmosphere laden with heightened trade tensions and an increasingly challenging global environment that has also compelled the OECD to lower its global growth projections into the coming years. The report noted ongoing inflationary pressures attributed to high import prices and stable wage growth expected to persist into 2025, which should eventually ease in 2026 as spare capacity and a loosening labor market become evident. These changes come despite the UK government’s efforts, particularly through the Chancellor Rachel Reeves, to address its significant debt burden and reduce public debt, as the nation continues to grapple with substantial financial obligations. Over the last quarter, the UK economy did show some growth, recording an increase of 0.7% in the early months of the year; however, the OECD also reported that this positive momentum is quickly fading as business sentiment deteriorates. The uncertainty surrounding the UK is largely tied to U.S. tariff policies and plans introduced in April, suggesting that these international relations are spilling over into domestic economic health, thereby amplifying concerns among UK businesses about future operations and profitability. The OECD suggests that, with global economic growth anticipated to slow to 2.9% due to these multifaceted pressures, the ramifications for both international markets and local economies are profound. As policymakers and economists continue to assess the situation, the emphasis will increasingly be placed on mitigating adverse effects and fostering environments that nurture growth. This shifting economic landscape signals an urgent need for adaptive strategies in both governmental fiscal policies and broader economic planning to navigate these turbulent times ahead.