The Organisation for Economic Co-operation and Development has maintained its forecast for UK GDP growth at 0.9% for 2026, a marked deceleration from the 1.4% pace estimated for 2025. The slowdown is attributed largely to renewed energy inflation driven by the US-Israel conflict with Iran, which has raised costs for businesses and households and weighed on the broader economic outlook.
The OECD also warned that persistent regional disparities across the UK are constraining living standards and overall economic performance, urging structural reforms to close the gap. Despite the downbeat assessment, Chancellor Rachel Reeves has pointed to forecasts showing the UK as the fastest-growing G7 economy in Europe through 2027.
The data arrives during a period of domestic political upheaval, with Andy Burnham set to replace Sir Keir Starmer as prime minister next week, a transition that will test the incoming government's capacity to address economic and geopolitical headwinds.