U.K. economic growth is expected to be stifled by an ongoing squeeze on the country’s public finances, the Organisation for Economic Cooperation and Development (OECD) said on Tuesday.
The U.K. is expected to grow 1.3% in 2025 before slowing to 1% in 2026, the OECD said in its latest global economic outlook report, “dampened by heightened trade tensions, tighter financial conditions, and elevated uncertainty.”
The organization projected that growth will “remain modest,” impacted by bolstered trade tensions and uncertainty surrounding consumer confidence and business sentiment.
“The drag on external demand, private consumption, and business investment is projected to more than offset the positive effects of last autumn’s budgetary measures on government consumption and investment,” the OECD said.
While the budget deficit is expected to improve from 5.3% in 2025 to 4.5% in 2026, according to OECD forecasts, debt interest spending remains high. Public debt is set to continue rising and to reach 104% of GDP [gross domestic product] in 2026, the OECD said.
