Interest rates 'set to be higher for longer'

05 Dec 2024

The Organisation for Economic Co-operation and Development (OECD) has warned that interest rates will be higher for longer due to the recent Autumn Budget.

The OECD said that whilst the Budget would help to boost the UK economy in the short-term, changes to tax policy and spending mean that borrowing costs will fall more slowly.

OECD forecasts suggest that the economy will grow more slowly this year than previously anticipated. According to the OECD, the UK economy will grow by 0.9% this year, down from a previous prediction of 1.1%. The economy will then grow by 1.7% in 2025 and 1.3% in 2026.

Responding to the forecast, Chancellor Rachel Reeves said: 'Growth is our number one priority.

'Growth only matters if it's matched by more money in people's pockets.

'This government will get our economy growing with our National Wealth Fund, reforming the remits of our regulators and pension megafunds to attract better investment, as well as reforming our planning laws – all so that we can rebuild Britain for good.'