The largest tax and expenses cuts will be dragged on the growth of the United Kingdom next year, which adds to a blow of the tariffs of the president of the United States, Donald Trump, and one of the highest inflation rates between the economies of the G7, warned a new report.
The organization of Economic Cooperation and Development (OECD) is expected to say that the “strictest fiscal position” of Great Britain, which means higher taxes and higher governmental expenses, weigh on the economy, with a growth that will be abruptly facilitated from 1.4% this year to 1% in 2026.
The economists of the influential organization also predict that the inflation of the United Kingdom will increase, with Great Britain experiencing the highest level among the G7 group of advanced economies this year.
GDP in 2025 “Data-Source =” The Ocdd “>
Inflation in the United Kingdom is expected to reach 3.5% in 2025, 0.4 percentage points higher than its previous prognosis, and still remains well above the objective of the Bank of England in 2026, with 2.7%, with the high prices of food that increase the cost of living.
This would see that the United Kingdom suffers the second highest inflation rate in the G7 next year, only behind the US, according to the report.
Although the OECD accumulated its 2025 prognosis for the Gross Domestic Product (GDP) of the United Kingdom of 1.3% that predicted in June, maintained the perspective without changes by 2026 in which it will mean a strong decline in growth during the previous year.
In his provisional economic perspective, he said that the United Kingdom would be retained by “a stricter fiscal position, greater commercial costs and uncertainty” that said “would drag external and internal demand.”
It is ahead of the government's autumn budget statement in November, with the Chancellor under pressure to further increase taxes to help balance the books.
Foreign Minister Rachel Reeves said that the figures “confirm that the British economy is stronger than the prognosis: it has been the fastest growth of any G7 economy in the first half of the year.”
She added: “But I know there is more to do to build an economy that works for working people, and reward for working people. That is what I am determined to deliver through our plan for change.”
The economy of the United Kingdom grew 0.7% during the first three months of the year and 0.3% during the second quarter, according to official figures.
The OECD also warned that growth in the world's economy will weaken significantly during the rest of the year as the highest tariffs in the United States enter into force, cushioning trade and global investment.
The global economy was stronger than expected in the first half of 2025, but the activity will “soften significantly in the second half of this year,” he said.
This is partly due to the fact that the “frontal load” offers an impulse to the production and trade of goods, referring to an avalanche of imports in the first half.
This has happened as companies made more shipments while trying to get ahead of the most pronounced taxes on their exports, as a result of Trump's policy changes.
It meant that the growth of industrial production exceeded the average of 2024 in most advanced economies during the first half of 2025, the OECD found.
Strong levels of investment in technological sectors, particularly artificial intelligence (AI), also reinforced activity in the United States and Japan.
But as the frontal load stops, the highest rates enter into force and persistent uncertainties decrease investment and trade, economic growth is expected to decrease.
The trade between the United States and China, the two largest economies in the world, has declined sharply in recent months, said the OECD.
Global GDP is expected to decrease 3.3% by 2024 to 3.2% in 2025, and 2.9% in 2026.
However, the 2025 figure is 0.3 percentage points higher than the previous OECD forecast established in June.
The OECD said that the expenses and prosecutors for governments around the world should focus on the “need to strengthen sustainable economic growth while preserving adequate support for those in need.”
He also recommended that central banks remain “vigilant”, but continue to reduce interest rates where inflation is on a road down.
