**UK Economy Growth Forecast Downgraded Amid Global Tensions, Says OECD**
The Organisation for Economic Co-operation and Development (OECD) has revised its growth forecast for the UK economy, predicting a lower growth rate for 2027 due to ongoing geopolitical tensions, particularly the conflict involving the US and Israel in Iran. The OECD's latest report indicates that the UK is among several nations experiencing economic challenges as a result of this prolonged conflict.
According to the OECD, the UK's economy is now expected to grow by 1% in 2027, a slight decrease from the previous forecast of 1.1%. However, there is a more optimistic outlook for 2026, with the growth forecast upgraded from 0.9% to 1.1%. This adjustment reflects a positive short-term outlook driven by solid domestic demand growth.
Chancellor John Healey is set to present his first Budget at the end of October, and these economic forecasts will likely play a significant role in shaping fiscal policies. The OECD's report highlights that while the immediate future appears more favorable for 2026, the anticipated growth in 2027 may be hampered by rising fuel prices, which are expected to impact overall economic performance.
The OECD has pointed out that the extent of these effects will largely depend on the duration of supply disruptions caused by the ongoing conflict. The agency has also emphasized that risks to the global economy are not limited to the Middle East conflict; climate change-related supply shocks are another significant concern.
Globally, the OECD has projected a 0.1% decrease in growth for the upcoming year, affecting various countries including Australia, Canada, and those within the Euro-area. The conflict in the Middle East has led to increased oil and gas prices, contributing to inflationary pressures in several economies, including the UK.
In addition to energy prices, the OECD has warned that weather-related disruptions, particularly those associated with the strong El Niño phenomenon, could adversely affect agricultural output and subsequently drive up food prices.
As the UK prepares for a challenging economic landscape, the implications of these forecasts will be closely monitored by policymakers and economists alike. The interplay of domestic demand, global tensions, and environmental factors will be crucial in shaping the economic trajectory for the UK and its international partners in the coming years.