The Organisation for Economic Co-operation and Development (OECD) has slashed the UK’s growth forecast due to the instability caused by the United States’ uncertain trade policy and tariffs.
Growth forecasts for the UK in 2025 and 2026 have been revised to 1.1% and 1.0%, respectively. Previous growth forecasts for the UK were at 1.4% for 2025 and 1.2% for 2026.
According to the OECD, growth around the world will be more subdued than expected due to diminishing confidence and heightened policy uncertainty thanks in part to the imposition of tariffs by the US and retaliatory actions.
It projects global growth slowing from 3.3% in 2024 to 2.9% in both 2025 and 2026, with this slowdown most concentrated in the US, Canada, Mexico and China.
“The global economy has shifted from a period of resilient growth and declining inflation to a more uncertain path,” said OECD Secretary-General Mathias Cormann.
“Our latest economic outlook shows that today’s policy uncertainty is weakening trade and investment, diminishing consumer and business confidence and curbing growth prospects.”
Cormann said governments must address any issues in the global trading system positively and constructively through dialogue – keeping markets open to secure growth.
The OECD said that further tariffs would further inhibit growth and could trigger disruptions to the global supply chain.
It said that inflation could be more persistent than anticipated, especially in economies facing substantially higher trade costs or with tight labour markets, further weakening growth.
The graph below shows the revised growth forecasts for OECD countries as of June 2025.
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