Budget 2026: Four OBR forecasts lay bare Britain’s fiscal vulnerability
If you’re in a good mood, why not consider ruining it by reading this week’s OBR report. The fiscal watchdog paints a bleak picture of the health of the British economy and the public finances over the rest of this Parliament – one in which the UK is in a steady state of decline, funding [...]
The Office for Budget Responsibility (OBR) has released its Budget 2026 projections, revealing significant challenges facing the British economy and public finances over the remainder of the current Parliament. Four key forecasts highlight the financial vulnerabilities the country may encounter.
Firstly, net migration has been revised downward from the previous 100,000 projection for 2027. This nearly halved figure indicates a shrinking population, which is expected to commence in 2029. The decline in population will negatively impact the economy and the tax revenues collected by the government.
Secondly, following the year's above-target inflation levels, average earnings are projected to fall in real terms next year. This development could exacerbate the financial difficulties faced by families already struggling to make ends meet.
Thirdly, the OBR predicts that Labour is unlikely to achieve its housebuilding target. Net additions to the housing stock are anticipated to fall in the coming year and remain below current levels for at least the next three years. This will lead to an ageing, deteriorating housing stock, as well as continued challenges for young individuals seeking to enter the housing market.
Finally, the OBR has revised its projections for welfare upward. The significant increases in the state pension and the substantial rise in spending on health-related benefits, reaching £70 billion by 2031/2, indicate that welfare spending will continue to grow as a share of GDP.
Written by urgent.news from City AM's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
