The UK's economic growth forecast for 2026 has been revised down to 1.1%.

The UK Office for Budget Responsibility issued a statement on the 3rd, revising down the UK's economic growth forecast for 2026 from the previous estimate of 1.4% to 1.1%.

The Office for Budget Responsibility projects that the UK's GDP will grow by 1.1% in 2026, 1.6% in both 2027 and 2028, and 1.5% in each of the subsequent two years.

However, this forecast by the Office for Budget Responsibility has not yet factored in the potential impact of recent developments in the Middle East on energy prices and government borrowing costs.

Amid escalating tensions in the Middle East, rising international energy prices have heightened inflation concerns and influenced investors' expectations regarding the direction of the Bank of England's monetary policy.

On the 3rd, the yield on UK 10-year government bonds rose by approximately 0.14 percentage points to around 4.5%, increasing the government's financing costs. Pricing in the derivatives market indicates that investors now anticipate only one 25-basis-point interest rate cut by the Bank of England before December this year, whereas just last week, the market widely expected two rate cuts within the year.