Healey may have bought himself some breathing space but Britain faces a funding crisis: ALEX BRUMMER
Whatever else one might think about Chancellor John Healey's first Budget, he and his Treasury team managed expectations very well.
The Office for Budget Responsibility (OBR) has warned Britain's Chancellor, John Healey, that the country faces a significant financial crisis in the coming years. Growth is expected to slow dramatically, while unemployment and inflation are set to rise. The OBR predicts that the government will need to find an additional £11bn in revenue between 2029 and 2032 to avoid cutting spending.
The fiscal watchdog's warning stems from a shift in growth forecasts, now expecting just a 1% increase in 2024, down from 1.6% earlier. This slowdown is attributed to the ongoing impact of the Iran war on trade and the rising cost of energy. Inflation is also expected to increase to an average of 3.4% in 2027, largely due to higher energy prices.
Unemployment is projected to reach 5.1% by 2027, up from 4.1% over the past two years. The OBR warns that the tax burden will reach a historic high, putting Healey in a challenging position to meet his fiscal targets. Despite the grim outlook, markets have so far reacted positively to the budget announcement. However, experts warn that the real fiscal hole could be even larger when considering additional defence spending and social care commitments after 2030.
Written by urgent.news from City AM's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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