UK faces higher inflation and record tax burden in bleak new forecast
- Leaked forecasts from the Office for Budget Responsibility (OBR) predict higher inflation and unemployment for the UK in 2025 and 2026 than previously expected.
- The OBR also indicated that economic growth will be weaker from 2026 until the end of the current Labour government, with the tax burden continuing to rise.
- Despite this, the OBR upgraded its economic growth forecast for 2025 to 1.5 per cent from 1 per cent, though it anticipates a slowdown to 1.4 per cent in 2026, down from an earlier 1.9 per cent projection.
- Inflation predictions were revised upwards to 3.5 per cent for 2024 (from 3.2 per cent) and 2.5 per cent for 2025 (from 2.1 per cent), though it is still expected to meet the 2 per cent target by 2027.
- The OBR highlighted that the UK's tax-to-GDP ratio is projected to reach a record high of 38.3 per cent by 2030-31, signifying record levels of tax burden.