The Office for Budget Responsibility's forecast shows higher inflation and unemployment for 2025 and 2026, with growth weakening from 2026 as the tax burden on the economy rises.

Markets mostly welcomed the Budget as gilt yields eased, though a brief spike occurred due to a technical error that caused the OBR outlook document to publish early.

Major tax changes include 4.7 billion pounds from salary-sacrifice pension contributions being charged to National Insurance, 2.1 billion pounds from higher rates on dividends, property, and savings income, and the threshold freeze extending to 2030/31.

Pantheon Macroeconomics cautioned that the fiscal outlook remains perilous, with risks that savings may not materialize and that defence spending could squeeze fiscal space.

The forecast emphasizes uncertainties around productivity, interest rates, asset prices, and welfare and health pressures, with a small margin relative to these risks.

Energy bill relief measures are expected to trim costs, with an estimated impact of 2.3 billion pounds.

The Economic and Fiscal Outlook was prepared with extensive staff work and interdepartmental engagement, with the Budget Responsibility Committee maintaining independence, noting minor timing differences in policy costings and one policy measure altered after finalisation but with minimal impact.

Near-term drivers include the impact of wage growth and higher domestic inflation on receipts, partly offset by higher welfare and local authority spending and debt interest costs.

Uncertainties acknowledged include productivity trajectory, interest rates, equity prices, earnings growth, and the fiscal effects of tax changes and welfare pressures, with the Cabinet’s policy package subject to final adjustments after costings certification.

Policy impacts include reversals to welfare measures, removal of the two-child limit in universal credit, renewables funding adjustments, and a package of personal and other tax rises designed to raise about 26 billion pounds by 2029-30.

Two supplementary briefing papers accompany the EFO: one on forecasting productivity and one on accounting for supply-side effects of policy.

Indirect policy effects are estimated to reduce borrowing in early years but add to it from 2027-28 onward due to higher debt service costs.

There were protests by farmers in London over the Budget, with police arrests for violating protest restrictions.