OECD cuts UK growth forecasts amid Trump tariff disruption

London — Britain’s economy will grow more slowly than expected in 2025 and 2026 as global growth drops off due to uncertainty, the Organisation for Economic Co-operation and Development (OECD) said on Monday

The OECD’s latest forecast underscores the challenges facing chancellor of the exchequer Rachel Reeves in her spring statement next week.

The Paris-based organisation lowered its forecast for UK growth this year to 1.4% from 1.7% in December. Growth in 2026 was trimmed to 1.2% from 1.3%.

The OECD cut its outlook for many other leading economies citing the rise in uncertainty and significant changes in trade policies. US President Donald Trump has introduced import tariffs for many of the US’s trading partners and has threatened to go further. Other countries have retaliated.

Reeves is expected to announce a lowering of Britain’s official economic forecasts in her speech on March 26 that is likely to include spending cuts to stay on track to meet her budget rules.

Those official forecasts suggest Britain’s economy will grow by 2% this year, far above most other estimates. The Bank of England recently halved its projection to 0.75%.

“This report shows the world is changing, and increased global headwinds such as trade uncertainty are being felt across the board,” Reeves said in response to the OECD forecasts.

She highlighted how the OECD expected the UK to grow more quickly than France, Germany and Italy in 2025 and 2026 and would have the second-fastest growth in the Group of Seven economies after the US.

The OECD said British inflation was likely to average 2.7% in 2025 and 2.3% in 2026, unchanged from its December forecast but higher than in other big European economies.

Reuters