UK will be worst-performing G7 economy in 2025, OECD forecasts

The U.K. will be the worst performing G7 economy next year as high interest rates and restrictive fiscal policy hampers medium to long-term economic growth, the Organisation for Economic Cooperation and Development (OECD) has predicted. 

In its annual assessment of the U.K. economy, published Thursday, the OECD slashed its U.K. growth outlook for GDP to 0.4 percent this year and 1 percent in 2025. This is down from 0.7 percent and 1.2 percent respectively from its last prediction in March. 

As such, the predictions show the U.K. is set to be the slowest growing economy in the G7 group of countries next year and the second worst this year, behind Germany. 

The outlook is a blow to Prime Minister Rishi Sunak and his Chancellor Jeremy Hunt, who have routinely claimed that the U.K. economy has turned a corner, despite the country going into a “technical” recession in the final quarter of 2023. 

It is also ominous timing for the government, with voters in England and Wales flocking to vote Thursday in local and London elections.

Pollsters predict the Conservatives are set to lose around 400 seats, which will put Sunak under increasing pressure, especially as national polling shows the opposition Labour party are soaring ahead just months out from a general election.

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