Summary
The UK's official economic forecaster, the Office for Budget Responsibility (OBR), has updated its expectations for the country's economy. While growth is predicted to be higher this year than previously expected, forecasts for the next several years have been lowered. The OBR also anticipates an increase in the overall tax burden due to frozen tax thresholds.
Key Facts
- The OBR predicts the UK economy will grow by 1.5% this year, up from an earlier forecast of 1%.
- Economic growth is expected to slow to 1.4% in 2026 and remain low in the following years.
- Income tax thresholds will be frozen until the 2030-31 financial year.
- These frozen thresholds mean 780,000 more people will pay the basic income tax rate, 920,000 the higher rate, and 4,000 the additional rate by 2029-30.
- The UK's overall tax revenue is expected to reach 38% of GDP by 2030-31 due to these measures.
- Inflation is currently expected to be 3.5% this year, slightly above the previous estimate of 3.2%.
- The OBR's report was accidentally published online ahead of the Chancellor's budget announcement.
- Inflation is expected to decrease to 2% by 2027 and stay there in subsequent years.
