UK budget watchdog to include persistent inflation
The Office for Budget Responsibility will factor in the lasting impact of inflation following the Iran war and previous energy shocks. This adjustment may reduce the fiscal headroom available to Finance Minister Rachel Reeves as she prepares the annual budget later this year.
The United Kingdom budget watchdog will incorporate higher inflation persistence into its next forecasts, potentially reducing the government's £24 billion fiscal buffer. The Office for Budget Responsibility (OBR) is updating its economic models on June 2 to reflect lessons from past energy shocks and the recent conflict in Iran. This shift signals tighter fiscal constraints for Chancellor Rachel Reeves as persistent price pressures and rising borrowing costs limit public spending leeway.
