UK’s Reeves: We now expect GDP growth of 1.0% this year

• Growth recovers to average around 1.75% over the rest of the decade
• OBR: underlying fiscal outlook has deteriorated since October

• if global trade disputes escalate to include 20 pct pt rises in tariffs between the USA and the rest of the world, this could reduce UK GDP by a peak of 1% and reduce current surpluses in the target year to almost zero

• UK finance minister Reeves says to raise extra 1 bln stg by tackling tax evasion
• UK finance minister Reeves says this statement contains no further tax increases
• OBR: Borrowing is projected to be 3.5 billion pounds higher and debt 0.6% of gdp higher at the end of the decade than in our October forecast
• UK’s Reeves: this statement does not contain any further tax increases
• UK’s Reeves: obr forecasts show 2028/29 current budget deficit/surplus of 7.1 bln stg (Oct forecast: 9.3 bln stg surplus)
• OBR forecasts 2029/30 net financial debt 82.7% of GDP (Oct forecast 83.4%)
• OBR forecasts show 2025/26 current budget deficit of 36.1 bln stg (Oct forecast: 26.2 bln stg)
• CPI seen at 3.2% in 2025 vs 2.6% in October
• CPI seen at 2% from 2027 onwards

Gilts have bounced around on these headlines, rising first but a Reuters calculation shows an additional 47.5B in additional borrowing between now and 2029/30 compared to October forecasts.

This article was written by Adam Button at www.forexlive.com.