Jury 'remains out' over economic impact of budget as OBR slashes 2026 GDP growth forecast

Matthew Ryan, CFA Ebury

We think that the jury remains out, for now, with regards to the possible economic impact of the budget.

Admittedly, the OBR’s growth forecast for 2025 was raised to 1.5% (from 1.0%), but the 2026 projection was slashed by 0.5p.p (to 1.4%), while the average growth forecast was downgraded by 0.3 p.p to 1.5%, largely due to lower forecasts for productivity.

Our initial take is that the near-term growth drag due to the tax hikes will probably be modest, but the medium-term impact is up in the air and will be dependent on how the tax hikes impact the not easily quantifiable measures of consumer and business confidence.

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

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