MNI BRIEF: UK Fiscal Tightening "More Backloaded" - OBR

The UK government’s fiscal consolidation is heavily backloaded, with tightening worth GBP11.7 billion in 2029-30, though increases to spending are greater than increases to tax for 2025-26, 2026-27 and 2027-28.

“The average overall tightening is just £2.0 billion (0.04 per cent of GDP) is the result of a relatively large policy loosening this year and over the next two years (on average £7.5 billion or 0.2 per cent of GDP over the next two years),” an Office for Budget Responsibility document said, and this is offset by “a relatively large tightening” in the last two years of the forecast.

Across the five years of the forecast, the budget delivers a relatively small net reduction in borrowing of 0.04% of GDP (GBP2.0 billion) on average per year. Analysts had warned that more frontloaded fiscal tightening would be more credible.(See MNI INTERVIEW: UK Fiscal Gap Needs Simple Tax Hikes - King)

The OBR removed the document from their website as it was published in error.