UK Chancellor Rachel Reeves said her economic strategy is working despite downgraded growth projections, citing global uncertainty and rising geopolitical risks.
However, the OBR upgraded projections for 2027 and 2028 to 1.6%, signaling a stronger medium-term outlook for the UK economy.
Inflation is now forecast at 2.3% this year, lower than November’s 2.5% estimate, offering temporary relief to households and policymakers.
The projections were finalized before Middle East tensions escalated, with the OBR warning the conflict could have a “very significant” economic impact.
Soaring oil and gas prices have reignited concerns that inflation pressures could resurface, potentially limiting interest rate cuts by the Bank of England.
The unemployment rate is expected to peak at 5.3% this year, while GDP per capita is projected to rise 1.1% annually through 2030.
Reeves highlighted increased fiscal “headroom” of £23.6 billion and pledged long-term stability, prioritizing growth, global trade ties, and artificial intelligence investment.
