OBR Paints ‘Pretty Grim’ Picture as Growth Forecast Is Cut
The Office for Budget Responsibility cut its 2027 growth forecast to 1% and expects inflation to peak at about 3.75% early next year. The watchdog’s head, David Miles, called the outlook for living standards “pretty grim”. Higher interest rates and inflation leave borrowing, before new policy, about £11bn a year above March’s forecast. The Resolution Foundation calls the Budget “scattergun”.
The Foundation’s overnight analysis puts this Parliament on course to be the second worst for living standards since the 1950s, with a projected £1,000 fall in disposable incomes. Real incomes per person are £420 below their level two years ago and will not recover until April 2029. “Cost of living support is being spread far too thinly,” said its chief executive, Ruth Curtice. Headroom against the fiscal rules is about £15bn in 2029-30, and the tax burden reaches a record 38.6% of GDP. Unprotected departments face real cuts of 6.7%; Curtice doubts plans that tight “will survive reality”.