The Organisation for Economic Co-operation and Development (OECD) has scaled back its outlook for UK economic growth in 2025, cutting its forecast from 1.4% to 1.3%. The revision reflects concerns over rising government debt interest payments and increased trade barriers—particularly with the United States.

In its assessment, the OECD highlighted that the UK’s public finances allow little room for unexpected challenges. The organisation recommended that Chancellor Rachel Reeves consider a combination of targeted spending reductions and strategic tax reforms to help stabilise the economy.

Although early 2025 growth figures have outperformed expectations, the OECD noted a decline in business confidence and anticipates further slowing, predicting UK GDP growth will ease to 1% in 2026. It emphasised that the current state of the UK’s fiscal position could threaten the ability to meet existing financial rules.

How Does This Compare to the IMF’s Outlook?

Notably, the OECD’s revised 1.3% forecast remains slightly above the International Monetary Fund (IMF) estimate of 1.2%, reported just last week. The IMF’s figure, however, represented an improvement on its earlier projection.

What Happens Next?

The OECD’s announcement precedes Chancellor Reeves’ upcoming Spending Review, a key moment in determining future budget allocations across government departments.

A Broader Global Picture

The UK is not alone in facing economic pressures. The OECD has also downgraded its growth expectations for most major global economies, attributing the broader slowdown to escalating trade tensions. It warned that “weakened economic prospects will be felt around the world, with almost no exception.”

Planning Ahead

While national forecasts can set the tone for economic sentiment, they don’t have to define your business’s outlook. If you’d like support in planning confidently through uncertain times, we’re here to help you evaluate your options and make informed decisions.

See the full article:https://www.bbc.co.uk/news/articles/cq69j753egeo