Organisation for Economic Cooperation and Development says UK economy will grow by just 0.7% this year
The conflict in the Middle East will damage the UK’s economy more than any other industrialised nation, according to analysis by the Organisation for Economic Cooperation and Development (OECD), which warned over rising inflation.
In the first major assessment by a leading international thinktank of the economic impact from the attack on Iran, the OECD said the UK economy would grow by just 0.7% this year, compared with its last forecast, made in December, of 1.2% for 2026.
Noting a weakening of the UK jobs market and a contraction in business investment towards the end of 2025, the OECD attributed the downgrade to a lack of momentum going into 2026 as well as the shock from rising oil and gas prices as a result of the US-Israel attacks on Iran.
Illustrating the UK’s dependence on international trade and imports of fuel, the OECD said it had downgraded the UK’s growth in 2026 because it was likely to suffer higher inflation than previously expected.
