The UK’s independent economic forecaster has issued a series of damning predictions in its official economic outlook, unveiled alongside John Healey’s Budget today.
The UK tax burden is forecast to “increase sharply” to a new record high, the Office for Budget Responsibility said.
The tax burden indicates how much the Government collects in taxation, measured as a proportion of the total value of the economy.
The OBR forecasts the tax burden to rise from the equivalent of 36 per cent of GDP in 2025/26 to a new record of 37.9 per cent in 2027/28, then continue to climb to reach a peak of 38.6 per cent of GDP in 2031/32.
The forecast for government borrowing in the current financial year has also been revised upwards by nearly £18bn.
Borrowing in 2026-27 is now forecast to be £133.2bn, up from £115.5bn forecast in March, according to the OBR.
The amount of borrowing has also been revised up in every year of the OBR forecast through to 2030-31.
Meanwhile, the watchdog slashed its estimate for economic next year from 1.5 per cent to 1 per cent.
The OBR also said real household disposable income (RHDI) per person was set to “fall slightly in the near term”, then partially recover as the energy price shock from the war in Iran eases.
“But, in 2030-31, it is only around 2 per cent above pre-pandemic levels,” the budget watchdog said.
David Miles, who sits on the Budget Responsibility Committee (BRC) at the OBR, said: “It’s a pretty grim picture.
“If you go back to just before Covid and take that as your base, where we are right now – which is, what, some seven years later – is virtually no growth in per-person real household disposable income.
“That’s pretty unusual in the history of the UK. It’s to some extent – actually quite a substantial extent – just a reflection of very big increases in energy prices, which is very hard for the UK to avoid. We’re a big importer of energy.”
