The UK’s economic growth forecast for next year has been downgraded as the prolonged conflict in the Middle East pushes up energy prices and weighs on the global economy.
The Organisation for Economic Co-operation and Development (OECD) said the UK economy is expected to grow by 1 percent in 2027, down from its previous forecast of 1.1%.
However, the organisation upgraded its forecast for 2026, predicting growth of 1.1 percent, compared with 0.9 percent in its previous outlook.
The OECD said stronger domestic demand had supported the UK economy in the short term. But higher fuel prices were expected to weigh on growth in 2027, with the impact depending on how long supply disruptions caused by the conflict last.
Oil stockpiles and supplies from outside the Gulf states have so far helped cushion the effects on economies, the OECD said.
The OECD expects global growth to be 0.1 percentage points lower next year as a result of the conflict and other risks. Australia, Canada and the euro area are among the economies facing weaker prospects.
It also warned that climate-related supply shocks, including those associated with a strong El Nino, could affect agricultural production and push up food prices.
