Chancellor Rachel Reeves said she had the ‘right economic plan’ for the UK despite the budget watchdog slashing its forecast for growth this year.
Here is a summary of the new economic forecasts published by the Office for Budget Responsibility (OBR) to accompany the Chancellor’s spring statement.
– GDP
The UK economy is forecast to grow by 1.1% in 2026, lower than the previous forecast of 1.4% made by the OBR in November last year.
Economic growth as measured by GDP (gross domestic product) is then forecast to be 1.6% in 2027, higher than the previous forecast of 1.5%; 1.6% again in 2028, up from 1.5%; and 1.5% in both 2029 and 2030, unchanged from previous forecasts.
– Inflation
Inflation in the UK as measured by the Consumer Prices Index is forecast to be 2.3% in 2026, lower than the OBR’s previous forecast of 2.5%.
It is then set to be in 2.0% in 2027, the same as previously forecast, and remains at 2.0% in 2028, 2029 and 2030, unchanged from previous forecasts.
– Unemployment
The rate of unemployment in the UK is forecast to hit 5.3% this year, higher than the previous forecast of 4.9%.
Unemployment is then forecast to fall to 4.9% in 2027, still higher than the previous forecast of 4.6%; 4.4% in 2028, compared with the previous forecast of 4.3%; then unchanged forecasts of 4.2% in 2029 and 4.1% in 2030.
– Borrowing
The Government is forecast to borrow £132.7 billion in 2025/26, below the OBR’s previous forecast of £138.3 billion.
Borrowing is then forecast to be £115.5 billion in 2026/27, above the previous forecast of £112.1 billion.
It falls to £96.5 billion in 2027/28 (compared with the previous forecast of £98.5 billion), £86.0 billion in 2028/29 (compared with £86.9 billion), £63.4 billion in 2029/30 (compared with £67.9 billion) and £59.0 billion in 2030/31 (compared with £67.2 billion).
The amount of borrowing in 2025/26 is forecast to be equivalent to 4.3% of GDP, or the the total value of the economy, below the previous forecast of 4.5%.
It then falls to 3.6% in 2026/27, compared with the previous forecast of 3.5%; 2.9% in 2027/28 (compared with 3.0%); 2.5% in 2028/29 (compared with 2.6%); 1.8% in 2029/30 (compared with 1.9%); and 1.6% in 2030/31 (compared with 1.9%).
– Debt
The level of government debt in 2025/26 is forecast to be the equivalent of 94.3% of GDP, lower than the previous forecast of 95.0%.
Public sector net debt is then forecast to be 94.8% of GDP in 2026/27, below the previous forecast of 95.3%; 95.7% in 2027/28; a peak of 96.3% in 2028/29; then 96.1% in 2029/30; and finally 95.1% in 2030/31, a percentage point lower than the previous forecast for this year of 96.1%.
– Welfare
Total government spending on welfare is set to continue at record levels.
Spending in 2025/26 is forecast to be £332.9 billion, slightly below the previous forecast of £333.0 billion.
It then rises every year to reach an all-time high of £406.9 billion in 2030/31, slightly above the previous forecast of £406.2 billion.
