In accompanying documents, the OBR said Labour’s bid to shake up the planning system — in moves meant to unleash building and infrastructure projects — would deliver “a modest boost to the level of potential output of 0.2 percent in 2029.”
But the watchdog warned that “cumulative growth between 2023 and 2029 is still half a percentage point lower than we projected in October, and the level of productivity is over 1 per cent lower.” The economic picture had, it said, become “more challenging since the Autumn Budget.”
Donald Trump’s threat of global tariffs on U.S. imports could knock a sizeable chunk off GDP too, the OBR warned — and send Reeves plans to accumulate a budget surplus by the end of the decade into disarray.
On the politically-charged issue of the cost of the living, the inflation picture also looks tough for Reeves’ Labour Party, despite better-than-expected monthly figures out Wednesday morning.
“Higher energy and food prices and more persistently high wage growth cause inflation to rebound to a quarterly peak of 3.7 percent in mid-2025, before returning to target over the rest of the forecast,” the OBR said.
Welfare fight to come
Reeves has committed herself to strict fiscal rules meant to calm markets and close down a traditional line of attack against the Labour government she is a part of.
