The Organisation for Economic Co-operation and Development (OECD), an international group that provides economic analysis and policy advice to member countries, has updated its forecast for the UK's economic growth. It now predicts the UK economy will grow by 1% in 2027, slightly lower than its previous estimate of 1.1%. This revision follows a stronger-than-expected performance in 2026, where the UK's growth outlook was upgraded from 0.9% to 1.1%. The improved 2026 forecast is attributed to strong domestic demand, particularly in the second quarter of the year. However, higher fuel prices and the ongoing conflict in the Middle East are expected to slow growth in 2027. Inflation in the UK is also expected to fall more slowly than previously thought. While current consumer price inflation is projected to reach 3.1% this year—lower than the earlier forecast of 3.6%—it remains the second-fastest increase among G7 nations. The Bank of England predicts inflation will rise further, hitting 3.75% by the end of this year and peaking at around 4% in early 2027. The OECD now expects inflation to drop to 2.6% in 2027, a smaller decline than previously anticipated. Globally, economic growth in 2026 has been resilient in many countries despite the war in the Middle East. However, rising energy prices linked to the conflict are likely to increase inflation in the short term, with some easing expected in the following year. The impact on economic growth depends on how long supply disruptions persist. The OECD also warned that global growth is expected to be 0.1% lower in 2027, with countries like Australia, Canada, and the Euro-area facing challenges. Risks to the global economy include the ongoing Middle East conflict and climate-related supply shocks, such as those caused by extreme weather patterns like a strong El Niño, which could affect agriculture and raise food prices. The OECD's revised forecasts come ahead of the UK government's upcoming Budget, where Chancellor John Healey will seek to secure funding for various policy initiatives. Treasury minister Emma Reynolds noted that the UK economy is showing resilience despite the war in the Middle East, emphasizing the government's efforts to support families and implement long-term strategies to create jobs and drive economic growth.