Five Spring Statement charts you could see: Weaker development, increased debt prices and fewer rate of interest cuts

Fresh forecasts on the outlook for the British economy were published on Wednesday alongside Chancellor Rachel Reeves’ Spring Statement. 

The Office for Budget Responsibility’s latest figures reflect bleaker economic prospects for the UK and globally since its last projections in Autumn.

Forecasts for economic growth, public debt, inflation and other key measures have been revised and reflect the impact of adjustments outlined by the Chancellor earlier today. 

Reeves told the House of Commons on Wednesday: ‘Since autumn, the world has changed. 

‘Europe is now facing a generational challenge to its collective security. 

‘Global economic uncertainty has increased sharply, growth has slowed in many of Britain’s major trading partners, and borrowing costs have risen across most advanced economies. 

‘As an open trading economy, the UK is not immune to these challenges.’

This is Money highlights the key data from the OBR’s latest projections and how the outlook has changed.

Growth forecasts downgraded

The OBR halved its October GDP growth forecast for 2025 from 2 to 1 per cent as the watchdog highlighted a ‘structural weakness’ it says is ‘concentrated in productivity’, which it also cut forecasts for.

It also pointed to ‘cyclical, temporary, factors’ such as higher interest rate expectations, increases in gas prices and ‘elevated uncertainty’. 

The OBR now expects growth to average 1.75 per cent a year over the rest of the decade. 

Debt costs set to climb further  

The Chancellor’s Spring Statement took place in the shadow of elevated government borrowing costs, which are taking up an ever-greater share of the Treasury’s outgoings. 

But the OBR said on Wednesday it now expects longer-term borrowing costs to continue rising over the next five years – even as interest rates fall. 

Yields on 10-year gilts – the interest paid on public debt – have risen roughly 25 basis  points since October alongside similar moves in many other advanced economies.

The OBR now expects 10-year yields to average 4.8 per cent over the next few years to 2030, up from 4.4 per cent in October. 

Borrowing to fall more slowly  

Public sector net borrowing is forecast to fall from £137.3billion – or 4.8 per cent of GDP – this year to £74billion and 2.1 per cent of GDP in 2029-30. 

However, this is £12.1billion higher than in the previous forecast for 2025-26, made in October.

The OBR said: ‘A rising tax take contributes three-quarters to the fall in borrowing as a share of GDP over the next five years, with a reduction in spending as a share of GDP contributing the remaining quarter.’

Gas prices to raise CPI inflation

The Consumer Price Index is forecast to rise from an average of 2.5 per cent last year to 3.2 per cent for 2025, 60bps higher than forecast in October. 

The OBR pointed to wholesale gas prices, which it now expects to peak at around 130 pence a therm in 2025 – 30 per cent higher than forecast in October. 

This, combined with a less severe rise in oil prices, will result in a hike in the Ofgem price cap, which coupled with higher food prices and the increase in regulated water bills are expected to push monthly inflation up to a peak of 3.8 per cent in July 2025. 

CPI is then expected to rapidly fall back to around the Bank of England’s target of 2 per cent from 2026, as energy prices drop, food price inflation falls, and wage growth eases back from currently elevated rates.

Interest rates to fall more slowly 

The OBR’s projections for the BoE’s path for interest rates are based on market pricing. 

Markets expect the bank, which held interest rates at 4.5 per cent last week, to cut to 3.8 per cent from mid-2026 onwards.

But higher inflation has weighed on expectations, with just 60bps of cuts now forecast for this year. 

‘The expected path of bank rate is both slightly higher and flatter than in October,’ the OBR said. 

‘Market participants’ expectations for bank rate have remained volatile since finalising our October pre-measures forecast. Expectations for 2029 have ranged by a full percentage point, from 3.1 to 4.1 per cent.’