UK and global economies face growth amid rising energy costs

The United Kingdom economy is projected to grow by 1.3 per cent in 2026 and 1.4 per cent in 2027, according to KPMG. While household spending has been supported by warmer weather and business investment in technology, growth is expected to slow in the second half of the year due to rising energy bills and slow wage growth.

Rising wholesale gas prices, influenced by ongoing conflict in Iran, are expected to increase the Ofgem energy price cap by approximately four per cent in October. This energy shock is likely to put pressure on inflation, potentially prompting the Bank of England to raise interest rates to 4 per cent in November.

On a global scale, the United Nations has slightly raised its world economic growth forecasts to 2.6 per cent for 2026 and 2.9 per cent for 2027. However, the UN warns that geopolitical tensions and rising energy costs—including Brent crude reaching approximately $100 a barrel—are reviving inflation risks and complicating the outlook for central banks.