3 hours ago
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Reuters
Rachel Reeves has updated MPs on her economic plans, in a low-key statement that did not contain any major tax or spending measures.
It comes as the Office for Budget Responsibility (OBR) - which monitors the UK's public finances – prepares to publish its latest forecasts for the UK economy.
These projections, however, do not take into account the potential impact of the war triggered by the US-Israeli strikes on Iran over the weekend.
Reeves conceded that an "increasingly dangerous world" means the economic outlook has "become yet more uncertain".
Here is a summary of the main points.
- The OBR has downgraded its prediction for economic growth this year to 1.1%, the chancellor says, down from 1.4% at the time of the autumn Budget
- But it has upgraded its forecasts for 2027 and 2028 from 1.5% to 1.6%, whilst predicted growth in 2029 remains unchanged at 1.5%
- UK unemployment forecast to increase to 5.3% this year, the OBR says, up from 4.9% predicted at the Budget
- The OBR will not deliver a formal verdict on whether Reeves is on track to meet her tax and spending rules – this now only happens at Budgets, following a change she introduced last year
- But the chancellor says "headroom" against her rule not to borrow to fund day-to-day spending in five years' time has increased from £21.7bn to £23.6bn
- Headroom against the other rule - to reduce government debt falling as a share of national income - has increased to £27.1bn, she says
- Average interest rates on existing mortgages predicted to rise from 4.1% this year to 4.5% by 2030, lower than estimated at the Budget
- UK housebuilding set to fall from an average of 260,000 a year in the early 2020s to 220,000 in 2026/27, before rising to 305,000 a year by 2030/31
- A further watering down of plans to tax inherited farmland, announced in December, means the policy will raise £100m a year less, the OBR says
- January's softening of business rates for pubs and music venues in England will also cost the Treasury an extra £100m a year
