Revised Fiscal Outlook for the UK

British Chancellor of the Exchequer Rachel Reeves unveiled a revised fiscal outlook for the UK, highlighting challenges ahead. The Office for Budget Responsibility (OBR) has adjusted its economic projections, signaling slower growth and potential risks from global trade tensions.

Economic Growth Projections Adjusted

The OBR now forecasts the UK economy to grow by 1.9% in 2026, with a slight deceleration to 1.7% in 2028. Growth is expected to stabilize at 1.8% in both 2027 and 2029. Notably, this year's growth forecast has been significantly reduced from 2% to just 1%, reflecting heightened uncertainties.

Impact of Global Trade Tensions

Reeves pointed out the potential economic fallout from escalating trade tensions. A scenario with 20% tariff hikes between the US and other countries could slash the UK's GDP by up to 1%, potentially erasing the anticipated surplus in 2029–30. This underscores the fragile balance the UK economy faces in the coming years.