Tomorrow will see one of the year’s major fiscal events, as the Office for Budget Responsibility publishes its growth forecast and the Chancellor makes her Spring Statement to Westminster. Both will have a major impact on investors’ feelings about the UK and its prospects.
Chancellor Rachel Reeves has claimed she does not intend this to be a traditional fiscal event, with no new tax and spend announcements to be made. Tax increases are therefore not expected, but she is set to announce further reductions in public spending, following a £5bn welfare cut.
The OBR is likely to lower its GDP growth forecast for this year from the 2% predicted in October to around 1%, in line with estimates from economists surveyed by Reuters.
Encouragingly, the UK’s private sector output grew at its fastest rate in six months, driven by strong performance in the services sector—offering a positive signal for the government ahead of tomorrow’s Spring Statement.
Ahead of the Spring Statement Chancellor Rachel Reeves has announced that the Jackdaw and Rosebank oil and gas fields in the North Sea would get the consents they need to progress, emphasising their significance to the British economy for decades ahead.
This decision follows a recent court ruling that deemed previous approvals unlawful due to insufficient consideration of downstream emissions. The government's renewed support is expected to unlock substantial investments in the energy sector, particularly benefiting the supply chain in North-East Scotland.
