Budget blow for Reeves as UK’s key economic forecast slashed
Rachel Reeves dealt blow by Budget watchdog
- The Office for Budget Responsibility (OBR) is set to significantly reduce its estimates for productivity in the economy, which will lead to even lower economic growth.
- This revision will likely necessitate tax increases for Chancellor Rachel Reeves to balance the books, as it will lead to a larger budget deficit by 2030.
- The news comes at a challenging time for Ms Reeves, ahead of a Labour Party conference and her crucial Budget in November, putting pressure on manifesto commitments.
- Ms Reeves is attempting to attribute the downgrade to 14 years of Conservative government and the OBR's previously “over optimistic” estimates, though OBR sources state the revision is not due to current government measures.
- Economists largely agree Ms Reeves is not to blame for the long-term productivity issue, but warn she will still need to implement tax rises to address the growing fiscal gap.