The Office for Budget Responsibility has halved the UK growth forecast for 2025 from 2% to 1%, Chancellor Rachel Reeves has said.
However, the fiscal watchdog said that while growth has been downgraded for this year, it had been upgraded for every year after for the rest of this parliament – which is due to end in 2029.
The chancellor said she is “not satisfied with the numbers” for this year as she delivered her long-awaited spring statement in the House of Commons this afternoon.
Politics latest: Follow live updates
But, she explained, the OBR has forecast growth to hit 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.
She told MPs: “There are no shortcuts to economic growth. It will take long-term decisions. It will take hard yards. It will take time for the reforms we are introducing to be felt in the every day economy.
“It is right that the Office for Budget Responsibility consider the evidence and look carefully at measures before recognising a growth impact in their forecast.”
Please use Chrome browser for a more accessible video player
The chancellor pointed to changes to the National Planning Policy Framework, saying mandatory housing targets and bringing “grey belt” land into scope for development will “permanently increase the level of real GDP by 0.2% by 2029-30”.
This will bring an “additional £6.8bn in our economy and by 0.4% of GDP within the next 10 years”, she said.
Follow our channel and never miss an update
Ms Reeves also highlighted reforms to the pension system and a national wealth fund, adding it was part of a “serious plan” for economic growth.
Also announced in the spring statement today:
The chancellor also confirmed that a voluntary redundancy scheme is set to launch for civil servants as part of her mission to “make government leaner”. She said this will deliver £3.5bn in “day-to-day savings by 2029-30”.
Shortly afterwards, shadow chancellor Mel Stride accused Ms Reeves of being a “gambler with half-fiddled fiscal targets” and said she left “way too little headroom”.
Be the first to get Breaking News
Install the Sky News app for free
He accused the government of having “no plan” for the economy. “We have gone from incompetence to chaos,” he said.
“The result is the worst of all worlds.”
