Slow‑Mo Movement: OBR Slashes UK Growth to a Mere 1%
The Office for Budget Responsibility (OBR) has hit a nerve‑wracking note: the economy’s growth for 2025 is now pinched to just 1%. From a previous 2% estimate, that’s a full 1‑point drop that’s worrying even the most seasoned economists.
Why the cut?
- Ruthless cuts to the welfare state and public spending, as called out in Chancellor Rachel Reeves’ “emergency” Budget.
- Rees‑offred plans for incapacity benefits and disability which, according to OBR, will save only £3.4 billion by 2029/2030 – a shortfall from the £5 billion promised.
- Complicated fiscal rules rolled out in the autumn that are being preached as “non‑negotiable” stability measures.
Reeves Fires Up the House
Reeves told MPs, “I’m not satisfied with these numbers.” She slammed the previous government’s “economic irresponsibility” and vowed that the work‑force should have nothing to worry about while the tax‑payer’s coffers stay safe.
She said:
“There’s no progress in these cuts – it’s purely a Labour‑less, working‑man‑waiving scenario. The British people have put their trust in us because we say we’ll never let them fall onto a debt‑soaked future; now we have to earn that trust every single day.”
“In autumn, I’ll put another fiscal rule up – a single major fiscal event a year. I’m loyal to stability, not to get our wallets to bleed.”
Worrying for the Working Class
The chancellor wilted on the fact that it was fairly the working people, not just the wealthy, that bore the brunt of the last government’s “mini‑budget”. The sky‑rocket in bills, rents, and mortgages still haunts households two and half years later.
What’s Coming Next?
Reeves promises an autumn budget that lines up with the new fiscal rules. She’s determined to have just one major fiscal event per year – a bold move that could either calm the markets or add heat to the already simmering political brew.
Stay tuned for more budget updates – the rain of economic policy is just beginning to drizzle, but it could turn into a full‑on storm.
