UK growth forecast halved for this year

The UK economy is now predicted to grow at a much slower pace this year than previously expected, according to the government's official forecaster.

Presenting her Spring Statement, Chancellor Rachel Reeves said the Office for Budget Responsibility (OBR) thinks the economy will now grow by 1% in 2025, down from its October prediction of 2%.

"I am not satisfied with these numbers," said Reeves, who has made growing the economy one of her key promises.

However, the OBR raised its growth forecasts for the following years and Reeves said by 2029-30 the economy would be bigger compared to the forecast at the time of the Budget in October.

The watchdog now expects the economy to grow by 1.9% in 2026, by 1.8% in 2027, by 1.7% in 2028 and by 1.8% in 2029.

The OBR also raised its forecast for inflation this year to 3.2% but expects the rate of price rises to fall back to the Bank of England's 2% target in 2027.