Markets were rattled on Wednesday morning after the UK’s Office for Budget Responsibility (OBR) accidentally published its Budget forecasts ahead of schedule.
Sterling initially spiked but later reversed gains, with GBP/USD down 0.2% at 1.3135. Gilts were volatile, with 2-year and 10-year yields both rising by around 4 basis points after an early dip.
The premature release revealed £26.1 billion in tax rises by 2029-30 and forecast UK economic growth averaging just 1.5% over the next five years.
Borrowing is expected to rise by £6 billion next year before falling £15 billion by the end of the forecast period.
“This is the key to why markets might see this Budget as lacking credibility,” said Neil Wilson at Saxo, pointing to the reliance on long-dated tax increases.
Key fiscal measures include freezing tax thresholds, a National Insurance charge on salary-sacrificed pensions, higher taxes on investment income, and a new EV mileage charge.
Despite a larger £21.7 billion fiscal buffer, public debt is forecast to peak at 97% of GDP, while the tax burden hits a record 38.3%.
The OBR's growth forecasts was revised up for this year, but down for coming years.
For 2025, gross domestic product (GDP) is expected to rise 1.5%, up from the 1% forecast in the spring statement in March
For 2026, growth is expected to slip to 1.4%, down from 1.9%; for 2027 it is forecast to pick up slightly to 1.5%, down from 1.8% before.
For 2028, 2029 and 2030, growth of 1.5% is expected.