OBR expected to sound alarm on Healey’s spending pressures

Britain's fiscal watchdog, the Office for Budget Responsibility (OBR), is expected to warn about spending pressures on the government when it releases its analysis of the Budget next week. This move would signify the scale of challenges facing Chancellor Jeremy Healey, according to economists. The OBR could assess the spending pressures ahead of next year's Spending Review, where Healey plans to outline defense expenditure to reach three percent of GDP.

Such an alert from the independent body, whose forecasts determine if the Chancellor meets fiscal rules, would signal caution against his plans at a time when bond traders and economists are closely monitoring spending levels. The Treasury declined to comment on speculation before the Budget. In the current plans, spending is set to rise by around 0.3 percent in real terms in 2029-30, down from 2.6 percent in 2025-26.

Significant tax increases worth dozens of billions of pounds would be needed to keep spending rising at a fast pace, according to Westminster think tanks. Analyst Matt Swannell believes the OBR is likely to raise warnings around the Spending Review, similar to previous fiscal reports that have cautioned governments about raising public spending plans before settlements are decided among ministers.