UK economy will grow by less than expected next year, OECD says
The OECD expects UK economic growth next year to be weaker than previously forecast, with higher energy prices and climate change weighing on activity. That leaves the outlook exposed to prolonged Middle East disruption and further energy-cost pressure.
The OECD expects the UK economy to grow by less than previously forecast next year. The organisation linked the weaker outlook to risks including higher energy prices caused by the conflict in the Middle East and the effects of climate change.
The warning comes as the conflict threatens to keep energy markets volatile, increasing costs for households and businesses. The OECD also identified climate change as a potential drag on growth, adding a longer-term risk to the near-term energy shock.
Higher energy costs can feed into household bills, business operating expenses and inflation, creating pressure on demand and leaving policymakers with a more difficult trade-off between supporting activity and containing price growth.
The scale and duration of the economic impact remain uncertain. The outlook depends on how the conflict develops, how energy prices respond and whether climate-related disruptions intensify.
The next key markers are revisions to the OECD's forecasts and incoming UK data on growth, inflation and household spending. Energy prices and developments in the Middle East will help determine whether the downgrade becomes a broader deterioration in the outlook.
The OECD cut its UK growth outlook for next year as Middle East conflict and climate change threaten higher energy prices.
The implication is a tighter policy trade-off: higher energy costs can squeeze demand while adding inflation pressure, leaving the outlook sensitive to the conflict's duration and energy-market response. No single company is identified, so the read is macro rather than a single-name equity call.
A de-escalation in the Middle East or a sustained fall in energy prices would remove the central drag identified by the OECD.
CoverageSource: BBC Business · Published here WED, SEP 23 · 4:05 AM ET · the only report in this recordHow this is decided →
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A shorter conflict or easing energy prices could limit the growth hit and leave the downgrade as a contained forecast adjustment.
A prolonged conflict combined with climate-related disruption could raise energy costs further and deepen the UK slowdown.
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