OECD raises UK 2026 growth forecast, cuts inflation outlook on energy support
Britain’s economy will grow faster and inflation will ease more quickly than previously expected, the OECD said on Wednesday, with new government support measures helping to cushion households from a renewed rise in global energy prices.
The Organisation for Economic Co-operation and Development raised its 2026 UK growth forecast to 1.1%, up 0.2 percentage point from its June outlook, while cutting its 2027 forecast by 0.1 point to 1%. It said newly announced government support measures were expected to underpin consumer spending.
UK headline inflation is now expected to average 3.1% in 2026, 0.6 percentage point below the OECD’s previous forecast, before easing to 2.6% in 2027. The 2027 forecast was raised by 0.2 point.
The OECD expects UK interest rates to remain unchanged until late 2027, contrasting with the United States, euro zone, Australia and South Korea, where it expects modest rate increases in the near term.
The UK forecasts came as the OECD cut its global growth outlook, projecting world GDP growth of 2.9% in 2026 and 3% in 2027.
It said the outlook remained highly dependent on developments in the Middle East, with disruptions to Gulf oil production and exports and threats to shipping through the Bab al-Mandab Strait pushing energy prices higher again.
The OECD assumes energy prices will decline in 2027, in line with futures markets, but warned that prolonged disruptions to Middle East exports could weigh on global growth and drive inflation higher.
Other risks include weather-related supply shocks linked to a strong El Niño, further rises in long-term government bond yields and weaker-than-expected returns on artificial intelligence investment.
The OECD said governments should target energy support at households most in need, while preserving incentives to reduce energy consumption and setting clear expiry dates for measures. Central banks should ensure inflation expectations remain anchored as energy prices rise, it said.
