The UK is likely to see lower than expected growth in the coming five years and will miss targets that aimed to see it have the highest sustained growth in the G7.
This is according to accidentally released forecasts published by the Office for Budget Responsibility (OBR) ahead of today’s Budget. The OBR’s report shows that UK GDP is now forecast to be:
- 2025: 1.5% (up from the 1% forecast in the spring statement in March);
- 2026: 1.4% (down from 1.9%);
- 2027: 1.5% (down from 1.8%);
- 2028: 1.5% (down from 1.7%);
- 2029: 1.5% (down from 1.8%);
- 2030: 1.5% (a new forecast).
Notably, these figures are all weaker than the UK’s trend growth rate before the financial crisis of 2007/08.
Despite the downgrade, Chancellor rachel Reeves has confirmed that the UK is on track to meet her “stability rule” – which is for the current budget to be in balance, with twice as much headroom as before in 2029-30. Here are the new forecasts for the current budget deficit:
- 2025-26: A deficit of £52.4 billion (up from a deficit of £36.1 billion forecast in March)
- 2026-27: A deficit of £28.8 billion (up from a deficit of £13.4 billion forecast in March)
- 2027-28: A deficit of £4.6 billion (lower when compared with a surplus of £6 billion forecast in March);
- 2028-29: A surplus of £3.9 billion (down from a surplus of £7.1 billion forecast in March)
- 2029-30: A surplus of £21.7 billion (up from a surplus of £9.9 billion forecast in March)
- 2030-31: A surplus of £24.6 billion (a new forecast).
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