# UK economy to grow 0.9% this year but outlook cut for 2027 – OECD

By Susannah Streeter — 2026-06-03

Susannah Streeter, chief investment strategist at Wealth Club, said: “London’s blue-chip index has retreated in early trade, as a more pessimistic attitude creeps back in.

“The OECD has warned that the global outlook has weakened significantly since war erupted in the Middle East, and the fall out will have significant repercussions.

“Fresh strikes by Iran on Kuwait and Bahrain have caused fresh nervousness about just how long the Middle East crisis will continue for.

“The global economy is increasingly operating at two speeds. While AI-related investment remains exceptionally strong, with countries heavily exposed to AI supply chains benefiting from the surge in investor demand, the wider economic picture is marked by rising trade disputes, geopolitical instability and weakening business confidence, all of which are acting as a drag on activity.

“The UK economy is set to stay sluggish, with growth of 0.9 per cent this year according to OECD forecasts and just 1.1 per cent next year. So the UK will lag behind much of its developed-world peers.

“Weak productivity, stretched public finances that offer limited near-term support and higher taxes are all dragging on growth and that’s before you add in the ongoing squeeze from higher energy prices.

“Consumer sentiment is likely to remain subdued as households brace for the squeeze of higher bills.

“Amid this backdrop, the UK is set to stay mired in underperformance and searching for momentum.”

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