OECD warns Reeves higher taxes and spending restraint will limit consumer expenditure
A leading thinktank has warned Rachel Reeves that tight government spending and higher taxes will restrict consumer expenditure, despite it predicting the UK economy will grow at a faster pace than France, Germany and Italy next year.Analysts at the Organisation for Economic Cooperation and Development (OECD) said the government’s ongoing “fiscal consolidation” – meaning higher taxes and reduced government spending – would act as a “headwind” to the UK economy, with “past tax and spending adjustments weighing on household disposable income and slowing consumption”.The Paris-based organisation predicted that the UK economy would expand by 1.2% next year, while the big three eurozone economies would each fail to reach 1%.Offering a boost to Reeves after she faced calls to resign after the budget, the UK’s growth rate was upgraded from a previous forecast of 1% for next year.
However, that represents a slowdown from the 1.4% growth predicted for this year, unchanged from the last forecast three months ago.The chancellor – who has put an emphasis on growing the UK economy – announced £26bn worth of tax rises in last week’s budget, with measures including a freeze on income tax thresholds that will leave 1.7 million people paying more, taking the tax burden to an all-time high, according to the Office for Budget Responsibility (OBR).Separately, the OECD said the US economy would grow by 1.
7% next year, down from 2% this year and 2.4% in 2024, in a blow to Donald Trump’s efforts to increase growth by restricting imports and reducing regulations on big industries.In a report that highlighted how a flurry of activity this year to cope with Trump’s tariffs had given a temporary lift to many economies, the OECD said there would be a return to lower, stagnant rates of expansion across much of the industrialised world.The UK, like most industrialised countries, is expected to reduce interest rates as inflation is predicted to gradually return to a 2% target by mid-2027.The report predicts there will be two more reductions in rates, from 4% now to 3.
5% in the second quarter of 2026, but this will mark the end of rate cuts.The chancellor welcomed the prospect of higher growth and lower inflation.She said: “Last week my budget cut waiting lists, cut borrowing and debt and cut the cost of living.Less than a week later, the OECD has upgraded our growth and cut its forecast for inflation next year.”The UK’s economic establishment was rocked on Monday by the resignation of Richard Hughes, the chair of the OBR, which provides the Treasury with independent forecasts of the economic outlook and government finances.
Hughes quit after a report said the leadership of the OBR should take responsibility for information about the budget being accessed before the chancellor’s speech, breeching a longstanding protocol.Hughes was also in the midst of a dispute with Reeves over whether she had misled the public about the state of the public finances based on private briefings by the OBR.Most governments are expected to struggle to accelerate growth next year while they impose tight spending controls and restrict borrowing levels, limiting their ability to increase investment and raise living standards.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionMathias Cormann, the OECD secretary general, described the return of low growth as a mark of resilience amid global uncertainty about trade.However, he said there were concerns about low levels of productivity across the OECD’s 38 member countries, which also include Vietnam, Mexico, Canada and Costa Rica.
The OECD report said: “The global economy has been resilient this year, despite concerns about a sharper slowdown in the wake of higher trade barriers and significant policy uncertainty.Activity has held up thanks to front-loading of production and trade, strong AI-related investment and supportive fiscal and monetary policies.“Yet, global trade growth moderated in the second quarter of this year, and we expect higher tariffs to gradually feed through to higher prices, reducing growth in household consumption and business investment.Labour markets are still relatively tight, but are showing signs of easing, as job openings have fallen back to their pre-pandemic levels of 2019.”In line with most other international forecasters, the OECD said global economic growth would slow from 3.
3% in 2024 to 3.2% in 2025 and 2.9% in 2026, followed by a small rebound to 3.1% in 2027.In October the International Monetary Fund said global growth was projected to slow from 3.
3% in 2024 to 3,2% in 2025 and 3,1% in 2026,In an apparent rebuke to Trump, Cormann said: “Constructive dialogue between countries is central to ensure a lasting resolution to trade tensions and improve the economic outlook,”
The rise of deepfake pornography in schools: ‘One girl was so horrified she vomited’
‘It worries me that it’s so normalised. He obviously wasn’t hiding it. He didn’t feel this was something he shouldn’t be doing. It was in the open and people saw it. That’s what was quite shocking
UN experts raise concerns over homes rented out by English social landlord
UN experts have said that one of England’s biggest social landlords appears to have systematically failed to ensure the habitability of its rental properties.In a letter to the UK government, they cite the case of a disabled tenant, Sanjay Ramburn, 55, who they say lived with his family of five in an L&Q group property in Forest Gate, east London for several years with no electricity. They experienced four ceiling collapses, as well as severe damp and mould that affected their health.The children developed breathing issues, tinnitus and skin problems. Ramburn, who reported racial harassment and antisocial behaviour at the hands of his upstairs neighbour that he said was not addressed by L&Q, suffered severe mental health issues, the letter says
Almost 4 million children in UK affected by economic abuse, charity finds
Almost 4 million children in the UK are suffering the impact of economic abuse in their families, with some having pocket or birthday money stolen by the perpetrators, a charity has found.Data from charity Surviving Economic Abuse (SEA) showed that over the past year 27% of mothers with children under 18 had experienced behaviour considered to be economic abuse, where a current or former partner has controlled the family’s money.The research found perpetrators used various means, including stopping mothers accessing bank accounts and child benefits, and refusing to pay child maintenance.As a result, some children are missing out on essentials including clothes and food.A third of the women who experienced economic abuse by a former partner reported that their ex refused to pay child support, or paid it unreliably, despite being able to afford it
Resident doctors in England to go on strike in run-up to Christmas
Thousands of doctors in England are to go on strike again this month, in a dispute over pay and job security.The British Medical Association has announced that resident doctors – formerly known as junior doctors – will begin a five-day strike action that will run from 7am on 17 December until 7am on 22 December.It is the 14th strike by doctors since March 2023 and follows a similar five-day action last month, which led to warnings that the NHS may have to cut frontline staff and offer fewer appointments and operations if the strikes continue.The BMA said resident doctors were being driven “away from jobs and to the picket line” because the government was failing to make a “credible offer on jobs or pay”.Dr Jack Fletcher, chair of the BMA’s resident doctors committee, said: “With the government failing to put forward a credible plan to fix the jobs crisis for resident doctors at the same time as pushing a real-terms pay cut for them, we have no choice but to announce more strike dates
Assisted dying bill is safer than any other in the world | Letters
Dr Lucy Thomas raises some interesting points in her defence of the House of Lords’ behaviour on assisted dying (Letters, 26 November). But it is a stretch to suggest that the 1,000 amendments that peers have tabled to the bill represent effective independent scrutiny.What possible justification can there be for requiring every dying person – including a 90-year-old in their final weeks with advanced metastasised cancer – to provide a negative pregnancy test before their request is approved (amendment 458)? I am sure there are many peers who want to scrutinise the bill in a sensible way, but they are being thwarted by a handful who seem intent on stopping law change at any cost.The bill as currently drafted – which MPs have amended and approved – is safer than any other in the world, including in its protections for doctors. Clause 31 ensures that if Dr Thomas doesn’t wish to support her patients with this option, she would be under absolutely no obligation to do so
Shortage of ‘breakthrough’ weight loss drugs will slow fight against obesity, WHO warns
Weight loss drugs such as Mounjaro offer huge potential to tackle soaring obesity globally but are currently only available to one in 10 of those who need them, the World Health Organization has said.Their proven effectiveness in helping people lose weight means the medications represent “a new chapter” in how health services can treat obesity and the killer diseases it causes, the WHO added.Its statement urged countries to do what they could to ensure that people who would benefit from glucagon-like peptide-1 (GLP-1) therapies could access them. But while eligible adults generally should get them, pregnant women should not use them, the WHO stated.Limits on global production capacity mean that now only at most about 100 million people could receive the drugs – only 10% of the 1 billion who could benefit
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