No doubt the economy downgrade is a blow to the government’s growth pledgepublished at 09:43 GMT
09:43 GMT
Michael Race
Business and economics reporter
Chancellor Rachel Reeves reiterated this morning that economic growth was the government’s number one priority.
However, the latest forecast released alongside the Budget this week revealed the UK economy is predicted to grow at a slower rate than previously expected from next year.
The Office for Budget Responsibility (OBR), which maps out how the economy is set to perform based on the government’s tax and spending policies, increased its growth expectations for this year, but downgraded its forecast for the following four.
The OBR now predicts the economy will expand by 1.5% this year, higher than its previous estimate of 1%.
But it has lowered its growth estimates to 1.4% in 2026 and 1.5% in all of the following four years.
When an economy grows, businesses on average have more money to spend to create more jobs or give pay rises, and workers have more cash to spend. As a result, more tax is paid to the government, which can be used to increase funding to public services, such as schools, hospitals and the police.
Reeves has pledged to beat the forecasts, but there’s no doubting that the downgrade is a blow to the government’s growth pledge.