Britain faces a bigger economic downgrade as a result of war in the Persian Gulf than any other major country, according to the first comprehensive assessment of the implications of the conflict.
The Organisation for Economic Co-operation and Development (OECD) cut its 2026 forecast for UK gross domestic product by 0.5 percentage points, meaning Britain will have among the weakest economic growth in the developed world this year.
Its prediction for a 0.7% rise in output amounted to the worst downgrade among OECD member nations, with the euro area and South Korea following close behind.
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By contrast, the US will enjoy stronger growth this year as a result of the events of the past few weeks.
The divergence is largely explained by higher energy prices, which act as a tax on British living standards, since the UK is an energy importer, particularly sensitive to gas prices, while the US exports significant amounts of hydrocarbons.
The OECD said that it was downgrading its forecasts for growth widely following the sharp increase in the price of crude oil, alongside other key related products, from jet fuel and diesel to fertilisers which will weigh heavily on prices for consumers including those for food and other essential goods.
The OECD interim forecast is the first major update for the global economy from a major international body since the onset of military activity in the Persian Gulf.
It said: “The breadth and duration of the conflict are very uncertain, but a prolonged period of higher…
