OECD, 2024.

Economic growth is resuming, but challenges remain. Gradual fiscal consolidation is required over the short term to support the return of inflation to target and rebuild fiscal space, following substantial support during the pandemic and the energy crisis. Growing spending needs due to ageing and investment necessary to support the green transition call for tax reforms to strengthen revenues. Supply-side reforms are needed to sustain growth, including by providing businesses with certainty regarding taxation and land use planning to boost investment, and by strengthening work incentives to reduce economic inactivity. The United Kingdom is a front runner in the progress to reach net zero by 2050, but more effort is needed to accelerate emission reductions in residential housing, including a clear long-term strategy, pricing signals, regulatory timelines, and financial support to stimulate the market for decarbonised heating solutions.

OECD, 2025.

GDP growth is projected to reach 1.3% in 2025 before slowing to 1.0% in 2026, dampened by heightened trade tensions, tighter financial conditions, and elevated uncertainty. Inflationary pressures will initially linger, due to higher import prices and robust wage growth in 2025, but subside over 2026, as spare capacity emerges and the labour market loosens. Substantial debt interest payments will continue to weigh on the fiscal balance and push up public debt.