Blow to Burnham as UK growth to slow next year despite stronger-than expected 2026 amid Middle East war
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Growth to the UK economy is expected to slow next year in a blow to the government's plans despite a stronger-than-expected performance in 2026 in the face of the Middle East conflict.
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UK inflation will be below previous forecasts this year but will then take longer than expected to fall back to target levels, according to forecasts.
It comes as the Organisation for Economic Co-operation and Development (OECD) said global growth was "resilient in many countries" during 2026 despite the impact of the war in Iran.
But recent rises in energy prices linked to the prolonged conflict are likely to cause more inflation in the near term, before gradually easing next year.
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In the UK, the economy is set to grow by 1.1% this year, according to the latest forecasts, an upgrade from a previous estimate of 0.9% growth in June.
Nevertheless, growth is still expected to be weaker than the 1.4% reported last year and is then likely to dip slightly next year.
Treasury minister Emma Reynolds said: "Despite unprecedented pressures and conflict in both the Middle East and in Europe, the UK economy is showing strong resilience.
"We will face these challenges together and we are already giving families space to breathe.
"We had the fastest growth in the G7 in the first half of the year and we are starting the big, long-term changes needed to create good jobs and growth in every postcode."
In June, the OECD had previously predicted economic growth of 1.1% but now said this is likely to be 1% as growth moderates globally.
Meanwhile, UK consumer price inflation is on track to hit 3.1% for this year, significantly lower than the previous prediction of 3.6% but still the second-fastest increase in the G7.
It follows a summer easing in energy prices amid the US-Iran ceasefire, but they have swung notably higher after the ceasefire collapsed in July.
Inflation lifted to a five-month high of 3.1% last month, with the Bank of England predicting last week that this will lift to 3.75% by the end of this year and peak at around 4% in early 2027.