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2025-10-28 17:57:46
[UK Fiscal Alert: Productivity Forecasts Revised Downwards, Leaving a £30 Billion Black Hole] ⑴ The UK Office for Budget Responsibility expects a sharp downward revision of its key productivity forecast by 0.3 percentage points, far exceeding market expectations of a 0.1-0.2 percentage point adjustment. ⑵ This downward revision could leave a £20 billion hole in public finances, with the Chancellor facing a £30 billion shortfall in his November 26 Budget. ⑶ According to think tank estimates, every 0.1 percentage point reduction in productivity growth will increase public borrowing by £7 billion by the 2029/30 fiscal year, while JPMorgan Chase estimates the actual impact could be closer to £27 billion. ⑷ Fiscal pressure stems from persistently weak productivity data since 2008 and the impact of Brexit, requiring the authorities to strike a balance between tax increases and spending cuts to maintain fiscal targets.
