The Office for Budget Responsibility (OBR) has downgraded its growth forecasts for the UK economy in a post-Budget blow to Chancellor Rachel Reeves.
After Ms Reeves's fiscal statement this afternoon, the fiscal watchdog shared its updated forecast for gross domestic product (GDP) growth which has been central to the Labour Government's vision since returning to Number 10 Downing Street last year.
Based on the OBR's projections, Britain's GDP will ease to 1.5 per cent, 0.3 per cent less than previously forecast in March.
Furthermore, the fiscal watchdog for Government spending estimates there remains a £20billion black hole in the public finances which the Chancellor hopes to address with her announcements today.
The OBR has given its assessment of the UK economy post-Budget
|PA
Confirmation of the GDP figures came after the OBR published it assessment earlier than expected before the Budget.
In the OBR's assessment, the fiscal watchdog stated: "This means that total growth in nominal GDP over the forecast is only around one percentage point lower than in March and is more tax rich, thanks to a larger share accruing to labour income and consumption.
"This, combined with frozen personal tax thresholds, boosts pre-measures tax receipts by amounts rising to £16billion by 2029-30 relative to our March forecast.
"But premeasures spending is also higher in every year and by £22billion in 2029-30 due to higher spending by local authorities and on welfare and debt interest.
"The net result is a modest medium-term deterioration in the pre-measures fiscal outlook, with borrowing £17billion higher this year but only £6billion higher in 2029-30 compared to our March forecast."
In March, the OBR provided its previous forecasts for GDP growth in the UK
|OBR
Notably, borrowing is projected to fall from 4.5 per cent of GDP in 2025-26 to 1.9 per cent of GDP in 2030-31 with debt rising as a share of GDP from 95 per cent of GDP this year and ending the decade at 96 per cent of GDP, which is two percentage points higher than projected in March.
Concerningly, this is twice the debt level of the average advanced economy. The current balance target is met in 2029-30 with a margin that fell from £10billion in the March forecast, to £4 billion in the pre-measures forecast, but is then boosted to £22 billion by Budget policies.
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