Global experts slashed their growth expectations for the next two years and warned of looming price rises from Donald Trump’s trade war.
It is another humiliation for the Chancellor, days ahead of her crunch spring statement, and lays bare the negative impact of her autumn Budget. Millions of hard-pressed households and firms face being hit by a £40billion tax raid next month, including a National Insurance increase.
The Office for National Statistics has said the economy is shrinking, with some analysts warning a recession is possible. Shadow Chancellor Mel Stride attacked Labour’s mishandling of the economy and claimed the "warning lights are flashing red".
He said: "It should come as no surprise that the UK's growth forecasts have been downgraded after Labour has trashed the economy.
"Things are set to get tougher, with Labour's jobs tax lurking on the horizon. With nine days to go until Labour's emergency Budget, the warning lights are flashing red.
"This is the latest embarrassment for Keir Starmer after he made growth his No1 mission." Reform UK MP Richard Tice said: "Rachel Reeves's blunder Budget has been a disaster for the UK economy. Higher taxes and plummeting business confidence is a recipe for economic disaster. We're seeing this plainly in today's OECD figures."
Struggles
The Organisation for Economic Co-operation and Development downgraded its UK growth projections for 2025 and 2026.
The body of 38 nations, set up to stimulate economic progress and trade, said the UK is expected to expand by 1.4% in 2025 rather than the 1.7% anticipated in December.
For 2026, growth of 1.2% has been pencilled in - down from 1.3%.
The estimates are another headache for the Chancellor as she struggles to balance the books ahead of her statement on March 26.
The Office for Budget Responsibility watchdog is thought to have followed the Bank of England in lowering growth hopes, leaving Ms Reeves trying to fill a £15billion black hole.
Labour's Budget tax raid in October has been partly blamed for the slowdown, which looks to have begun before President Trump's return to power. But, responding to the OECD interim Economic Outlook, Ms Reeves said: "This report shows the world is changing, and increased global headwinds such as trade uncertainty are being felt across the board.
"A changing world means Britain must change too and we are delivering a new era of stability, security and renewal, to protect working people and keep our country safe." The Chancellor said that this would mean Britain can "better respond to global uncertainty".
Mr Trump's changes mean imports from Canada and Mexico are now taxed at 25%, with Canadian energy products attracting 10% tariffs.
In addition, the 10% levy that he slapped on Chinese imports in February doubled to 20% this month. He has also vowed to apply hefty trade penalties to Europe.
While the UK has so far avoided harsh tariffs, it has been caught up in last week's 25% levies on foreign steel and aluminium shipments entering the US.
Some countries were quick to retaliate and financial...
It is another humiliation for the Chancellor, days ahead of her crunch spring statement, and lays bare the negative impact of her autumn Budget. Millions of hard-pressed households and firms face being hit by a £40billion tax raid next month, including a National Insurance increase.
The Office for National Statistics has said the economy is shrinking, with some analysts warning a recession is possible. Shadow Chancellor Mel Stride attacked Labour’s mishandling of the economy and claimed the "warning lights are flashing red".
He said: "It should come as no surprise that the UK's growth forecasts have been downgraded after Labour has trashed the economy.
"Things are set to get tougher, with Labour's jobs tax lurking on the horizon. With nine days to go until Labour's emergency Budget, the warning lights are flashing red.
"This is the latest embarrassment for Keir Starmer after he made growth his No1 mission." Reform UK MP Richard Tice said: "Rachel Reeves's blunder Budget has been a disaster for the UK economy. Higher taxes and plummeting business confidence is a recipe for economic disaster. We're seeing this plainly in today's OECD figures."
Struggles
The Organisation for Economic Co-operation and Development downgraded its UK growth projections for 2025 and 2026.
The body of 38 nations, set up to stimulate economic progress and trade, said the UK is expected to expand by 1.4% in 2025 rather than the 1.7% anticipated in December.
For 2026, growth of 1.2% has been pencilled in - down from 1.3%.
The estimates are another headache for the Chancellor as she struggles to balance the books ahead of her statement on March 26.
The Office for Budget Responsibility watchdog is thought to have followed the Bank of England in lowering growth hopes, leaving Ms Reeves trying to fill a £15billion black hole.
Labour's Budget tax raid in October has been partly blamed for the slowdown, which looks to have begun before President Trump's return to power. But, responding to the OECD interim Economic Outlook, Ms Reeves said: "This report shows the world is changing, and increased global headwinds such as trade uncertainty are being felt across the board.
"A changing world means Britain must change too and we are delivering a new era of stability, security and renewal, to protect working people and keep our country safe." The Chancellor said that this would mean Britain can "better respond to global uncertainty".
Mr Trump's changes mean imports from Canada and Mexico are now taxed at 25%, with Canadian energy products attracting 10% tariffs.
In addition, the 10% levy that he slapped on Chinese imports in February doubled to 20% this month. He has also vowed to apply hefty trade penalties to Europe.
While the UK has so far avoided harsh tariffs, it has been caught up in last week's 25% levies on foreign steel and aluminium shipments entering the US.
Some countries were quick to retaliate and financial...
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Daily Express (Digital) - 1 Issue, March 18, 2025