Key facts
- Government borrowing is expected to spike due to the Iran war.
- The OBR admitted it underestimated the effects of the last energy price shock.
- The Russia-Ukraine war led to gas prices rising approximately five times.
- The OBR's review of forecasting models suggests lessons were learned from the previous energy shock.
Chancellor Rachel Reeves has been warned that government borrowing is set to spike as a result of the Iran war. The Office for Budget Responsibility (OBR) admitted it had underestimated the effects of the last energy price shock. In a review of its forecasting models, the OBR suggested it had learned lessons from Russia's full-scale invasion of Ukraine, which led to gas prices rising by around five times. The OBR stated that the overall impact on public finances was to significantly increase government borrowing and debt.