The OECD has revised its growth forecast for the UK, predicting lower growth for next year due to the ongoing conflict in the Middle East. The agency highlighted that rising energy prices from this conflict could negatively impact the UK economy, although it has increased the growth outlook for 2026 from 0.9% to 1.1%.
Despite the short-term boost from solid domestic demand, the OECD warns that growth may decline in 2027 as higher fuel prices continue to affect economic performance. The situation remains fluid, depending on the duration of supply disruptions.
Watch for Chancellor Healey's upcoming Budget, which may address the impact of rising energy costs on consumers and businesses. The UK's growth trajectory could hinge on how quickly supply chains stabilize and whether domestic demand can offset inflationary pressures.