OBR growth forecast ‘will be halved’
Chancellor Rachel Reeves’ hopes for growth are set to be shattered as another forecaster looks to downgrade expectations.
The Bank of England halved its growth forecasts from 1.5 per cent to 0.75 per cent in February while the OECD recently dropped predictions the UK would expand by 1.7 per cent.
Now The Telegraph is reporting that the Office for Budget Responsibility (OBR) will cut the UK’s expected growth rate for 2025 from 2 per cent to around 1 per cent.
The figures would deliver a fresh blow to Reeves, who has committed to delivering growth “further and faster”.
The Chancellor is likely to point the finger at global economic turmoil brought by deepening trade tensions.
President Trump’s tariff threats coming from across the pond were also highlighted as a potential risk to the UK economy by the Bank of England yesterday.
The new tolls on steel and aluminium are set to hit Britain and the rest of Europe on April 2 – a day after Reeves’ £40bn tax raid comes into effect.
But businesses have blamed hikes to national insurance contributions (NICs) and changes to employment legislation for a slow down in activity.
A survey by Lloyds this week showed that fewer a third of UK sectors expected a rise in output.
Separate research by KPMG and the Recruitment and Employment Confederation (REC) suggested more firms were scaling back hiring plans.
Its permanent placement index for January stood well below the 50-mark, above which points to growth.
Some forecasters are even more despondent about the economy.
Analysts at Resolution Foundation said a drop in employment had all the indications that a recession was coming.