Key facts
- UK economic growth forecast for 2027 downgraded to 1%.
- OBR growth forecast for 2028 revised to 1.6%, 2029 to 1.8%, 2030 to 1.7%, and 2031 to 1.6%.
- Growth in 2026 upgraded to 1.2% from 1.1%.
- Inflation forecast for this year raised to 3.5% from 2%.
- Government borrowing to rise by £17bn if energy prices surge.
Britain's economy is forecast to grow by 1% in 2027, according to the government's independent forecaster, the Office for Budget Responsibility (OBR). Finance Minister John Healey announced the downgrade, a reduction from the OBR's previous estimate of 1.6% for next year. The OBR also warned inflation is poised to reach close to 4% as the impact of the Middle East war and soaring energy costs weigh on the economy.
Growth for 2026 was upgraded to 1.2% from 1.1% due to AI investment. However, Healey stated that the exchequer is spending an additional £14bn on debt interest due to financial market fallout from the conflict, pushing up global borrowing costs. The headroom against the government's main fiscal rule was reduced to £15bn from £23.6bn.