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The news will come as a major blow to the government, which has put economic growth at the centre of its plan for Britain
Millie CookePolitical CorrespondentMonday 24 November 2025 09:43 GMTComments
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Britain's fiscal watchdog will reportedly downgrade its economic growth forecasts for every year of the rest of this parliament when the chancellor announces her Budget this week.
The news will come as a major blow to the Labour government, which has put economic growth at the centre of its plan for Britain.
Rachel Reeves will deliver her Budget on Wednesday after a whirlwind of speculation about which taxes she will hike to help balance the books, including the expectation - and then apparent U-turn on - an increase to income tax.
On Wednesday, the chancellor will reveal the government’s latest set of tax and spending policies (Lucy North/PA) (PA Wire)The OBR will publish its latest forecasts following the chancellor’s Budget speech, with sources telling Sky News that it will downgrade its growth forecasts for 2026 and for the remaining years of the current parliament.
The watchdog was already expected to downgrade its official productivity forecasts, leaving a gap in the public finances of around £20bn.
Ms Reeves is poised to raise taxes in an effort to bridge the multibillion-pound gap in her spending plans and rescue Britain’s ailing public finances.
It comes as CBI boss Rain Newton-Smith will tell ministers and business leaders on Monday that firms are concerned the UK could “risk getting locked in a stop-start economy”.
She is also set to encourage the government to make “hard choices” and avoid “death by a thousand taxes”.
Overnight on Sunday, it was revealed that Rachel Reeves could hit more than 100,000 high-value properties with a mansion tax as she seeks to raise money to fill the financial black hole, having reportedly scaled back plans for a property tax.
She is now expected to apply a tax to homes worth more than £2 million in a move which could raise between £400m and £450m for the Treasury.
An extension of the freeze on income tax thresholds is also among rumoured measures and would see more people dragged into paying tax for the first time or shifted into a higher rate as their wages go up.
Among the “smorgasbord” of tax rises which are expected, Ms Reeves is also set to scrap the two-child benefit cap.
The latest reports about the OBR’s growth downgrade came just hours after business secretary Peter Kyle apologised for the speculation around the Budget and said that rumours have been “as frustrating for me and the chancellor as it has for everyone else”.
He told BBC Breakfast there is “intense pressure” on ministers to be “open about the direction of travel... while staying within the confines of what’s acceptable for a Budget”.
The Treasury has been contacted for comment.
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