The OBR has halved its growth forecast for the 2025 financial year from 2% to 1%.
Speaking during today's Spring Statement, chancellor Rachel Reeves said: "I am not satisfied with these numbers, and that is why we on this side of the house are serious about taking the action needed to grow our economy, backing the builders, not the blockers."
However, the OBR has upgraded its forecasts for the following years compared to its predictions in the October Budget.
The OBR is now forecasting growth of 1.9% in 2026 (up from 1.8%), 1.8% in 2027 (up from 1.5%), 1.7% in 2028 (up from 1.5%) and a new forecast of 1.8% in 2029.
The OBR also predicts that inflation will rise to 3.2% this year, up from 2.6% in its forecast at the Autumn Budget, falling to 2.1% in 2026 and averaging around 2% by 2027.
In the Spring Statement, Reeves also announced that Labour's planning reforms will permanently increase GDP by 0.2% by 2029/30 and increase GDP by 0.4% within 10 years.
Reeves says this is “the biggest positive growth impact that the OBR have ever reflected in their forecast”, adding that it puts the government “within touching distance” of its target of building 1.5m new homes over this parliament.
Yesterday, Reeves announced a £2 billion package of new grant funding to deliver up to 18,000 new social and affordable homes. The £2 billion of new funding will only support development on sites that will deliver in this Parliament, helping the government to meet its 1.5 million housebuilding target.
