The Organisation for Economic Cooperation and Development (OECD) lowered its forecast for British growth this year to 1.4% from its December forecast of 1.7%. Growth in 2026 was curtailed to 1.2% from 1.3%.
The OECD also cut its outlook for other leading economies citing the rise in uncertainty and the “significant changes” in trade policies. The import tariffs imposed by President Donald Trump have resulted in retaliations from trading partners, and there are further threats of additional/higher trade sanctions.
The OECD warned that the burden of the tariffs will fall mostly on consumers, cautioning over a “significant” impact on living standards. The UK too hasn’t avoided Trump’s trade penalties, with the 25% tariffs on steel and aluminium announced last week.
Europe will be impacted by the imposition of tariffs, with the OECD sharply downgrading growth across the euro area to 1% in 2025, down from the previously forecast 1.3%.
In terms of global growth predictions, the OECD shows a decline from 3.2% last year to 3.1% in 2025, with just 3% in 2026. “Further fragmentation of the global economy is a key concern. Higher and broader increases in trade barriers would hit growth around the world and add to inflation,” explained the OECD.
In response, Reeves said: “This report shows the world is changing, and increased global headwinds such as trade uncertainty are being felt across the board.”
No more fat to cut
With the UK government already on the back foot regarding the economy, the global trade uncertainty and downbeat OECD announcements, adds to the mounting pressure on the Chancellor.
The Bank of England halved its UK growth forecast for 2025 in February, from 1.5% to 0.75% on account of weak household and business confidence. Last week, data from the Office for National Statistics (ONS) showed the UK economy to have contracted by 0.1% in January. At the upcoming Spring Statement, Reeves is expected to announce a revision of Britain’s official economic forecasts, which is likely to include spending cuts to ensure she can meet her fiscal targets.
Urging Reeves to ease the pressure on businesses in the Spring Statement, the Horticultural Trades Association (HTA) highlighted the “triple whammy of financial pressures” faced by the horticulture sector, as outlined in the Autumn Budget. According to the HTA, horticulture businesses are now making tough decisions about their future.
“The rise in the minimum wage for the third consecutive year, combined with National Insurance changes and inheritance tax alterations, leaves our members with little room to manoeuvre. The margins are already tight, especially after a year of unpredictable weather. One of our members told me they face an additional £200,000 burden due to these combined changes. There is simply no more fat to cut. Businesses are being forced to rethink staffing, investment, and long-term resilience strategies. The Spring Forecast is an opportunity for the government to take action, ease these pressures, and ensure our sector can continue to grow, create jobs, and contribute to the UK’s green economy,” said Fran Barnes, Chief Executive of the HTA.
