The Organisation for Economic Co-operation and Development (OECD) has revised its growth outlook for the United Kingdom, lowering its projections due to rising global trade tensions and economic uncertainty. The UK economy is now expected to expand by 1.4% in 2025 and slow further to 1.2% in 2026, reflecting mounting challenges posed by shifting trade policies and market volatility.
The downgrade comes as the United States, under President Donald Trump, enacts aggressive tariff measures targeting key trading partners, including Canada, Mexico, and the European Union. The OECD warns that these escalating trade restrictions could trigger a prolonged economic slowdown by disrupting supply chains, raising costs for businesses, and weakening investor confidence. Additionally, inflationary pressures could intensify, making it harder for central banks to maintain stability.
Despite these external pressures, the UK has shown resilience, with steady consumer demand and a robust services sector. However, the OECD cautions that prolonged trade fragmentation could weigh heavily on long-term growth, particularly if businesses struggle to navigate new regulatory barriers. The organization urges world leaders to prioritize multilateral cooperation, strengthen supply chain resilience, and implement structural reforms to sustain economic momentum.
In response to the revised forecast, UK Chancellor Rachel Reeves is preparing to address the economic headwinds in the upcoming Spring Statement. Her strategy is expected to focus on fostering investment, stabilizing inflation, and positioning the UK as a strong global trading partner despite the uncertainty. Analysts predict the government may introduce measures aimed at boosting key industries, securing new trade deals, and enhancing economic competitiveness.
The OECD’s report signals a defining moment for UK policymakers, as they work to navigate an increasingly complex economic landscape. With global trade tensions reshaping markets, the government’s ability to adapt and implement forward-thinking policies will be critical in ensuring sustained growth and financial stability in the years ahead.
