Reeves says her plan is working as growth forecast cut for this year Chancellor Rachel Reeves asserted that her economic strategy is yielding results despite a revised downward projection for the UK’s growth this year. The government’s official economic forecast body, the Office for Budget Responsibility (OBR), adjusted its 2026 growth estimate to 1.1% from the 1.4% predicted in last year’s Budget. The OBR also revised upward its long-term growth projections, though the immediate outlook remains cautious. Reeves highlighted the OBR’s updated inflation forecast, which now anticipates a lower rate for 2026 than previously expected. The revised forecasts were made before the recent escalation of conflict in the Middle East, which the OBR warned could have a “very significant” impact on global and UK economic conditions. Reeves emphasized the government’s commitment to stabilizing the economy, stating it is the state’s responsibility to “secure our economy against shocks and protect families from the turbulence that we see beyond our borders.” The conflict has already triggered sharp increases in oil and gas prices, raising concerns about potential inflationary pressures. The OBR now predicts inflation will decline to 2.3% this year, down from 2.5% in November, before reaching the Bank of England’s target of 2% by the end of 2026. However, sustained high energy costs could disrupt this trajectory, potentially limiting the Bank of England’s ability to cut interest rates. Economists noted that the OBR’s revised forecasts offer some flexibility for the government. Paul Dales of Capital Economics suggested the “headroom” in the budget could provide additional resources for the autumn Budget, though he warned that Middle East developments could offset these gains.#rachel_reeves #middle_east_conflict #office_for_budget_responsibility #bank_of_english #capital_economics
