The OECD Verdict: UK Claims Global Economic Leadership While Leading Only in Inflation

Six months into Labour’s promise to deliver the “highest sustained growth in the G7,” the OECD has delivered its assessment: Britain will achieve the highest of something in 2025 - inflation. At 3.5%, UK price rises will outpace every other major economy, including Trump’s tariff-laden America. This isn’t a temporary blip. The OECD projects UK inflation will still be running at 2.7% in 2026, while growth limps along at 1% next year.

The government’s response? Rachel Reeves pointed to Britain being “the fastest growing of any G7 economy in the first half of the year” - carefully avoiding mention of what happens next.

The Context

This OECD report matters because it exposes the fundamental mismatch between British political rhetoric and economic reality. While ministers talk up their economic credentials, international observers see something different: a country where inflation stubbornly refuses to fall, growth is mediocre at best, and the government’s own policies are making things worse.

The inflation figure is particularly damning. Every other G7 nation - despite their own challenges, despite global supply chain issues, despite Trump’s protectionist agenda - has managed to get inflation under better control than Britain. The UK stands alone at the bottom of the table.

The Evidence

The numbers tell a stark story:

Inflation Reality: The UK’s 3.5% expected inflation for 2025 isn’t just the highest in the G7 - it’s 75% above the Bank of England’s 2% target. For comparison, even the US, implementing the most aggressive tariff regime since the 1930s, expects only 2.7% inflation.

Growth Trajectory: GDP growth is forecast to slow from an already modest 1.4% this year to just 1% in 2026. The OECD specifically cites Britain’s “tighter fiscal stance” - economist speak for the government strangling growth through higher taxes and reduced spending.

Business Confidence: The S&P Global PMI index dropped sharply from 53.5 to 51.0 in September - barely above the 50-point threshold that separates growth from contraction. Businesses are cutting back ahead of November’s budget, expecting more tax rises.

The NICs Impact: Retailers are already blaming the £25 billion increase in employer National Insurance contributions for pushing up prices. This is a government-created inflation spike, not an external shock.

The Pattern

This isn’t Britain’s first rodeo with simultaneous high inflation and weak growth. We’ve seen this movie before:

The 1970s taught us what happens when governments try to tax and spend their way out of economic problems while inflation runs hot. The result? Stagflation - that toxic combination of stagnant growth and persistent price rises that destroys living standards.

The pattern repeats because British governments, regardless of party, consistently choose short-term political fixes over long-term economic health. Labour promised to be different, to deliver growth, to restore economic credibility. Instead, they’re following the same playbook: raise taxes, increase spending, hope something changes.

The OECD’s assessment confirms what the data has been signaling for months: Britain’s economic problems are largely self-inflicted. While other nations grapple with global headwinds, the UK has added its own anchors through policy choices that simultaneously fuel inflation and suppress growth.

The Reality Check

What does highest G7 inflation combined with sluggish growth actually mean for British citizens?

Real Income Destruction: With inflation at 3.5% and wage growth unlikely to match, most workers will see their purchasing power erode. The government that promised to make work pay is presiding over work that pays less in real terms.

Mortgage Pain Extension: The Bank of England cannot cut interest rates aggressively while inflation remains this elevated. Homeowners hoping for relief will wait longer, while first-time buyers watch prices remain out of reach.

Public Service Squeeze: High inflation means every pound of public spending buys less. The NHS, schools, and local councils will feel the squeeze even if nominal budgets increase. Service quality will continue its downward trajectory.

International Competitiveness: UK businesses face higher costs than international competitors through both inflation and the NICs increase. This isn’t a recipe for the export-led growth Britain desperately needs.

The Institutional Failure

The OECD report reveals a deeper institutional malfunction. The Treasury knew the NICs increase would be inflationary - basic economics predicts that taxing employment raises costs. The Bank of England warned about persistent inflation pressures. Yet the policy went ahead anyway.

This is what institutional decline looks like: organs of state that should provide checks and balances instead rubber-stamp politically expedient decisions. The Office for Budget Responsibility will dutifully score the budget. The Bank will adjust its forecasts. Parliament will debate. But nobody stops the fundamental policy errors that create these problems.

Meanwhile, the government communication machine works overtime to redirect attention. Reeves highlights past performance while ignoring future projections. Partisan opponents score political points without offering alternatives. The fundamental issues - productivity stagnation, infrastructure decay, skills shortages - remain unaddressed because they require difficult decisions that extend beyond electoral cycles.

The Bigger Picture

The OECD’s verdict places Britain’s economic decline in international context. This isn’t about global factors affecting everyone equally - it’s about Britain performing worse than its peers on the most basic economic metrics.

When a country has the highest inflation in the G7 while also having:

• One of the lowest productivity growth rates
• Crumbling public infrastructure
• Declining public services
• Weak business investment
• A growing tax burden

You’re not looking at a temporary setback. You’re documenting structural decline.

The political class talks about “tough decisions” and “fixing the foundations” while making choices that accelerate the decay. They promise growth while implementing policies the OECD explicitly identifies as growth-suppressing. They claim to fight inflation while adding inflationary pressures through tax policy.

This is Britain in 2025: a country where political rhetoric has completely detached from economic reality, where international observers see clearly what domestic politicians refuse to acknowledge, and where each government’s “solutions” deepen the problems they inherited.

The OECD has delivered its assessment with diplomatic language and careful projections. The underlying message is less polite: Britain is becoming the economic sick man of the developed world, and its government’s policies are making things worse, not better.

For British citizens watching their real incomes shrink while their government claims economic success, the OECD report simply confirms what they already know from their weekly shopping bills and monthly mortgage payments: whatever politicians promise, the decline continues.