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Economic growth of the UK is expected to be suppressed by the country’s constant squeezing, the organization for economic cooperation and development (OECD) said on Tuesday.
The UK is expected to grow by 1.3% in 2025 before slowing up to 1% in 2026, OECD stated in its last world economic forecast Report: “Enhanced by increased trade tensions, tougher financial conditions and increased uncertainty.”
The organization predicted that the growth “remains modest”, under the influence of strengthened trade tensions and uncertainty related to consumer confidence and business sentiment.
“Draging external demand, private consumption and investment into business, presumably, more than compensating the positive effects of budget measures last fall 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, the OECD forecasts, interest on the debt remains high. Public debt should continue to grow and reach 104% of GDP (gross domestic product) in 2026, the OECD said.
The Labor Government and Finance Minister Rachel Reivz has repeatedly stated that their priority is to increase the growth and attract public finances of the country in order. Plans for state expenses announced in October last year, Reiva, which strives for self -proclaimed financial rules that daily expenses should be fulfilled on tax revenue.
She has repeatedly said that fiscal rules are “not subject to negotiations”, despite the measures leaving its small room, which acts in the case of unexpected economic shocks, amid insufficient growth for the UK, higher borrowing costs and wider world trading tensions and uncertainty.
While the OECD has agreed that “fiscal prudence is required, since the monetary position is gradually softened,” it warned that “efforts to restore the buffers should be raised before the face of a strong budget policy and a significant reduction in the risk of growth, while state investments are required.”
“Very thin fiscal buffers” of the government may not be sufficient to offer support without violating financial rules when further upset is materialized.
Review Costs Forward
The report comes just over a week ahead of the UK Chancellor Rachel Rivz, which provides her first “expenses” in which she stated state expenses for state departments.
From coming to power a little over a year ago government labor already announced the raft of reducing welfare costsTax taxes on employers are also increasing planning reforms aimed at reducing the bureau and enhancing infrastructure projects and housing development. It also announced an increase in defense costs up to 2.5% of GDP by 2027, which will be financed by reducing foreign aid.
Following the restriction of state borrowing and the exclusion of further taxes, there are now suggestions that the Reiviz may report further reducing the budget on the cost of June 11.
British Chancellor Cassie Rachel Rivz on a roundtable during a visit to the British steel platform on April 17, 2025 to Skuntorp, England.
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OECD urged the government to follow its plans to strengthen public finance and provide its ambitious Fiscal plansIncluding through the upcoming review.
“The balanced approach should combine targeted costs, including the closure of tax cracks; revenue increases, such as reassessment of tax ranges based on updated property values; and removing distortions in the tax system,” the statement said.
He also called on the UK to change the decline in labor market participation, carrying out the proceeded reforms in the state of well -being, “at the same time defending the most vulnerable.”
