Keir Starmer and Rachel Reeves.

Labour’s drive to bring down immigration is a “drag” on the UK’s economic growth, according to a highly-respected watchdog.

In a fresh blow for Rachel Reeves, the Organisation for Economic Co-operation and Development also blamed her tax rises and government spending cuts for the UK’s sluggish performance.

In its lookahead to the next two years, it said growth will slow from 1.4% this year to 1.2% next year, before edging up to just 1.3% in 2027.

Meanwhile, inflation in Britain will be the highest of all the G7 advanced economies this year, at 3.5%, and will remain second highest in 2026 at 2.5%, behind only the United States.

The OECD said: “Sluggish labour productivity and weak working-age population growth, partly due to slowing inward migration, will continue to act as a drag on the economy.”

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