Budget ‘papers over cracks’, say economists as UK growth forecasts downgraded

Economists have warned that plans by the Chancellor to raise the UK tax-take “papers over the cracks” in the economy, as UK growth forecasts from next year were downgraded.

The Government’s official forecaster improved its growth forecast for this year but downgraded its predictions for the next four years, while it also pointed to a worsening short-term picture for inflation and unemployment.

The financial markets were broadly positive about the Budget announcement, with government borrowing costs easing after Rachel Reeves confirmed a bigger buffer to meet her fiscal rules.

But gilt yields were shaken earlier on Wednesday after a “mistake within the OBR (Office for Budget Responsibility)” led to its economic outlook document being published early “accidentally”.

The OBR apologise