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UK faces higher debt costs and slower growth ahead of Budget

The OECD cut its UK growth forecast for next year to 1.0%, from 1.1%, citing energy-driven inflation pressure from the Middle East conflict and Russia-Ukraine war.

Reported · Written up by our desk · Economy

The UK has been warned to expect ballooning debt costs and slower economic growth ahead of Chancellor John Healey's first Budget next month, according to an OECD report discussed by the BBC.

The OECD said UK growth next year will be 1.0%, down from a prior expectation of 1.1%, while upgrading this year's growth outlook to between 0.9% and 1.1%, and it pointed to higher crude oil costs from the Middle East conflict and the Russia-Ukraine war.

The IMF head Kristalina Georgieva told the BBC that global shocks are pushing up debt levels and that governments have taken no action to contain the cost of servicing that debt, warning that action is needed to reduce “service cost.”

The BBC also linked the pressure on Healey to inflation-driven higher interest costs on government debt and an unexpected surge in government borrowing in August, as Prime Minister Andy Burnham seeks to ease the cost of living while balancing defence spending and fiscal commitments and rules.

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