The UK economy will grow below expectations again in 2027. The Organisation for Economic Co-operation and Development (OECD) cut its growth forecast for next year from 1.1% to 1%, in another negative data point for the Labour government of Andy Burnham.
However, the organization improved its estimate for 2026: it now expects the British Gross Domestic Product to grow 1.1% this year, up from the 0.9% it projected in June. The revision is mainly due to stronger domestic demand during the second quarter.
The outlook changes for 2027. The OECD anticipates that growth will slow to 1%, while inflation will remain above the Bank of England's target. The organization projects an average inflation rate of 3.1% for 2026 and 2.6% for 2027.
The OECD warns again about spending and public accounts
The new forecast comes at a particularly delicate time for Burnham's government, which faces fiscal pressures and will have to present its next budget while seeking to finance its government commitments.
In July, the OECD itself had warned about fiscal pressures, the high cost of debt interest, low productivity, and structural problems affecting British growth. It had also called for budget discipline and reforms aimed at improving productivity.
The organization now reiterated that the international scenario continues to be influenced by energy prices and the consequences of the conflict in the Middle East. Globally, the OECD projects a growth of 2.9% in 2026 and 3% in 2027.
The situation also impacts British inflation. The Bank of England had recently warned that inflation could exceed 4% at the beginning of 2027 due to rising energy costs.
Robert Jenrick criticized Burnham's economic direction
The new data was seized upon by Robert Jenrick, shadow chancellor of Reform UK, to question the government's economic policies.
In a statement released this Wednesday, Jenrick argued that the UK will grow much more slowly than the United States and noted that inflation remains around 3%.
