Rachel Reeves has said lower forecasts for the UK economy are a product of the Tories’ legacy, as she delivered her Autumn Budget.
On Wednesday afternoon, the chancellor delivered her much-anticipated autumn Budget.
But after weeks of speculation, the OBR accidentally published its forecast for the public finances and the UK economy before Reeves’ speech
This leaked a number of major announcements before the chancellor had the chance to speak in the Commons.
One of the main takeaways from the OBR’s report is that the UK’s real GDP is set to grow by 1.5 per cent on average over the next five years, 0.3 percentage points lower than previously projected.
The OBR said this was “due to lower underlying productivity growth,” which is forecast to grow by 0.3 percentage points to 1%.
This means £16bn less in tax receipts by 2030.
But speaking to the house, Reeves said these lower forecasts were a result of the “legacy” of 14 years of Tory governments.
The chancellor said the government beat forecasts this year “and we will beat them again”.
Reeves is set to raise taxes by £26 billion, more than doubling the government’s fiscal headroom to £21.7bn.
The OBR reports that by 2030/31, the tax take, the averaged out nationwide tax rate in the UK, will be at an all-time high 38% GDP.
The main announcements leaked in the OBR report are:
- Two child benefit cap to be lifted
- New tax for electric vehicles
- Fuel duty to be frozen until next September
- OBR report seemingly confirms new ‘mansion tax’
- Household energy bills to be cut
- Pension contributions to be taxed above £2,000