OECD downgrades UK growth outlook dealing Chancellor another blow ahead of the Budget

See more This is Money on Google - save us as a Preferred Source Updated: 04:11 EDT, 23 September 2026 Britain's economic outlook for next year has been downgraded by the Organisation for Economic Cooperation and Development (OECD) in a fresh pre-Budget blow to John Healey.The Paris-based organisation now thinks the UK will grow by just 1 per cent in 2027, down from a previous forecast of 1.1 per cent.If official forecasts produced alongside the Budget downgrade the outlook to a similar level, it will add to the headache facing the Chancellor. Back in March, the Office for Budget Responsibility (OBR) had projected 1.6 per cent growth for 2027.A sharp growth downgrade would make it even harder for Mr Healey's sums to add up as he tries to rebuild Britain's battered public finances, boost defence spending and fund a series of costly ambitions outlined by Prime Minister Andy Burnham.The OECD's UK growth outlook for this year, however, is upgraded slightly, from 0.9 per cent to 1.1 per cent.But that is still only half the pace of US growth, at 2.2 per cent – again falling short of Labour's manifesto ambition to achieve the strongest growth in the G7 group of major advanced economies. Chancellor John Healey is already reeling from worse than expected borrowing figuresThe report also provides little to cheer for Mr Burnham's hopes of easing the cost of living.While the OECD's UK inflation forecast for this year has improved – cut from 3.7 per cent to 3.1 per cent – that is still higher than every other G7 nation except the US.And the forecast for inflation next year has been increased from 2.4 per cent to 2.6 per cent.It comes as Mr Healey is already reeling from worse than expected public finance figures yesterday showing borrowing for the first five months of the financial year at £77 billion - £8 billion more than forecast by the OBR back in March.The figures come against a gloomy economic backdrop after Donald Trump's Iran war sent oil and gas prices soaring – with little sign that any lasting resolution is imminent. In Britain, growth has been more solid than expected in the first half of the year.The OECD said consumer confidence had remained resilient across advanced economies despite the war disruption.But there have been signs of pain, as credit card spending data in the UK, US and Germany shows households putting a higher proportion of spending towards fuel, amid 'very rapid growth' in petrol and diesel prices since the start of the conflict.The OECD predicts that 'newly-announced government support measures' will keep Britain's consumer economy ticking over this year and next.Globally, the report notes that 'economic prospects remain heavily dependent on whether a durable resolution to the Middle East conflict is achieved'.Chief Secretary to the Treasury Emma Reynolds said: 'Despite unprecedented pressures and conflict in both the Middle East and in Europe, the UK economy is showing strong resilience. 'We will face these challenges together and we are already giving families space to breathe. We had the fastest growth in the G7 in the first half of the year and we are starting the big, long-term changes needed to create good jobs and growth in every postcode.'Tory Shadow Chancellor Andrew Griffith said: 'The OECD have downgraded the UK's growth for 2027 to just a third of the average growth rate of the G20. We can and should aspire to do much better.'They urge countries to control spending and improve public sector efficiency. Instead, this government is trying to find new ways to tax you whilst having to pay interest rates on their borrowing which are the highest in the G7.'