OBR Cuts UK Growth Forecast for 2027

The UK's independent budget watchdog has sharply reduced its growth estimates for 2027. The report notes that the conflict in the Middle East is causing multibillion-pound damage to the British economy. Inflation is expected to reach nearly 4% as the country's initial resilience fades.

Chancellor John Healey announced a budget focused on helping families cope with the cost-of-living crisis. The package includes 100-pound payments for 20 million households and the end of standing charges on gas bills. The total cost of these measures reaches 2.6 billion pounds for the public purse.

Debt interest expenses rose by 14 billion pounds due to the impact of the conflict on global financial markets. The government temporarily raised taxes on banks to fund energy support. Fiscal headroom has fallen from 23.6 billion to 15 billion pounds.

Although growth for this year rose to 1.2% due to investments in artificial intelligence, the forecast for next year dropped from 1.5% to 1%. The watchdog warns that pressure on household disposable income will be persistent. Public debt is expected to fall at a slower pace than previously planned.