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4w ago

OECD cuts global growth forecast to 2.9% under impact of U.S. tariffs

The OECD warned that U.S. consumer inflation could surge to nearly 4% by the end of 2025 if current tariffs remain in place.

GDP growth is expect to hit reach a measly 1.9 per cent growth, the OECD has tipped in its latest economic outlook. Gaye Gerard/ NewsWire
Rachel Reeves, the chancellor, had previously been warned by the International Monetary Fund
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FILE - Shipping containers are seen ready for transport at the Guangzhou Port in the Nansha district in southern China's Guangdong province, April 17, 2025. (AP Photo/Ng Han Guan, File)

Overview

  • The OECD trimmed its global GDP growth outlook to 2.9% for both 2025 and 2026, down from 3.1% and 3.0% forecasts in March.
  • U.S. growth is now projected at 1.6% this year and 1.5% in 2026 as tariff-driven uncertainty raises costs for businesses and consumers.
  • The UK’s expansion forecast fell to 1.3% in 2025 and 1.0% in 2026, leaving Chancellor Rachel Reeves with under £10bn in fiscal headroom.
  • The OECD cautioned that further tariff increases and retaliatory measures could intensify the slowdown and disrupt global supply chains.
  • Internal polling shows two-thirds of Labour MPs oppose Reeves’s fiscal rules, adding political pressure before next week’s spending review.