Particle.news
Download on the App Store
30 ARTICLES
·
1h ago

OECD Flags Hotter UK Inflation, Slower 2026 Growth as Tariffs and Taxes Bite

The outlook points to demand being squeezed by tighter fiscal policy plus higher trade costs from US tariffs.

Image
Image
A gantry crane lifts a container at a port in Tianjin, China February 8, 2025. REUTERS/Florence Lo/File Photo
People walk on the esplanade of La Defense in the financial and business district of La Defense, near Paris, France, January 27, 2025. REUTERS/Sarah Meyssonnier

Overview

  • The OECD lifts its UK growth forecast for 2025 to 1.4% but keeps 2026 at 1.0%, signalling a marked slowdown next year.
  • UK inflation is projected at about 3.5% in 2025 and 2.7% in 2026, leaving price growth among the highest in the G7 and above the Bank of England’s target.
  • The report attributes H1 resilience to firms front‑loading shipments ahead of US tariff hikes and to AI‑related investment, with the full impact of higher trade barriers yet to feed through.
  • Chancellor Rachel Reeves welcomes the upgrade, noting H1 G7 outperformance, as attention turns to the 26 November Budget and pressure builds over potential tax rises and an expected OBR downgrade.
  • Fresh PMI data point to weakening private‑sector momentum, while KPMG’s separate outlook anticipates tax increases at the Budget and gradual Bank of England rate cuts later in 2025 and into 2026.