The Organisation for Economic Co-operation and Development (OECD) has downgraded the UK's economic growth forecast for 2027 due to the prolonged US-Israel conflict in the Middle East and its impact on global fuel prices. The downgrade is moderate but reflects broader economic headwinds affecting multiple major economies as higher energy costs and supply disruptions threaten growth prospects worldwide.

The OECD now predicts UK growth of 1% in 2027, down from its previous forecast of 1.1%, whilst upgrading near-term growth expectations for 2026 from 0.9% to 1.1% based on solid domestic demand. The outlook is clouded by higher oil and gas prices stemming from Middle East tensions, which push up inflation and reduce consumer spending power. Global growth is expected to be 0.1% lower next year, affecting countries including Australia, Canada, and the Euro-area, with additional risks posed by weather-related shocks such as a strong El Niño that could push up food prices.