The Chancellor was keen to demonstrate that the Government’s existing plans would deliver “economic stability in an uncertain world.”
The Office for Budget Responsibility (OBR) report, delivered to The Treasury on 26 February, already painted a picture of slow growth prior to any knowledge of a growing global conflict.
The OBR’s report shows that the nation’s growth forecast has been reduced in 2026 to 1.1 per cent – down from the 1.4 per cent growth forecast in November’s Autumn Budget.
However, from 2027, growth is forecast to increase to 1.6 per cent (up from 1.5 per cent from last year’s forecast) and will grow at a similar rate in 2028, before slowing slightly to 1.5 per cent in 2029 and 2030.
Whilst the Government may be focused on this positive growth, the predictions is still far below GDP growth seen in the years ahead of the 2008 financial crisis – almost two decades ago.
Despite this weaker economic performance and the anticipated rising costs from global conflict, the OBR has forecast that inflation will actually drop to 2.3 per cent in 2026, down from the 2.5 per cent forecast in the Autumn Budget. It believes that the UK will still meet its target of 2 per cent inflation by 2027.
As many economic pundits have already pointed out, this forecast may have already been out of date at the time it was delivered due to the impact of global conflicts.
Combined, these events create a powder keg of economic uncertainty, which could restrict investment and decision-making within many businesses.