OECD projects slower growth of Britain's economy

The Organization for Economic Cooperation and Development (OECD) on Tuesday projected a slowdown in Britain's economic growth, citing heightened trade tensions, tighter financial conditions, and rising uncertainty.

According to the OECD's latest economic outlook, Britain's gross domestic product (GDP) is expected to grow by 1.3 percent in 2025, before slowing to 1 percent in 2026.

"Inflationary pressures will initially linger, due to higher import prices and robust wage growth in 2025," the report noted. However, these pressures are expected to ease in 2026 as spare capacity increases and the labour market softens, it added.

The OECD also warned that high interest payments on public debt will continue to strain Britain's fiscal balance and contribute to a rising debt burden.

The report identified public finances as a key downside risk to Britain's outlook, cautioning that limited fiscal buffers may prove inadequate in the face of renewed economic shocks -- especially if fiscal rules are to be upheld.

Rising services price inflation was also flagged as a potential risk.

Globally, the OECD expects GDP growth to slow from 3.3 percent in 2024 to 2.9 percent in both 2025 and 2026. This projection assumes that tariff rates as of mid-May remain in place, despite ongoing legal disputes.