Particle.news
Download on the App Store
6 ARTICLES
·
yesterday

OBR Signals Productivity Downgrade, Raising Pressure on Reeves’s November Budget

An expected productivity downgrade would shrink projected revenues, pressuring Rachel Reeves’s narrow fiscal headroom before the 26 November Budget.

British Chancellor of the Exchequer Rachel Reeves attends the annual Mansion House dinner in London, Britain, July 15, 2025. REUTERS/Isabel Infantes/File Photo
Image
Image
The OBR’s March forecast gave Rachel Reeves limited headroom, which could be eroded by a cut to productivity assumptions

Overview

  • The Financial Times reported, and Reuters relayed, that the budget watchdog has indicated to ministers it is likely to lower its productivity assumptions following a summer stocktake.
  • Officials cited in reports said the resulting fiscal gap could run to tens of billions of pounds, set against the OBR’s March forecast that left just £9.9bn of headroom.
  • J.P. Morgan’s Allan Monks estimates a 0.1–0.2 percentage point cut to productivity growth could cost £9bn–£18bn a year, while Oxford Economics says reverting to the independent average would trim GDP by about 1.4% at the forecast horizon and require roughly £20bn in action to preserve headroom.
  • A Treasury spokesperson declined to speculate on the forecast and reiterated a commitment to keep taxes for working people as low as possible under existing pledges.
  • Opposition figures criticised the chancellor’s management as analysts judged tax rises or deeper spending cuts more likely at the 26 November Budget, with NIESR warning total tightening could reach up to £50bn.