The Office for Budget Responsibility revealed Chancellor Rachel Reeves's Budget early in an embarrassing leak when it published its official forecast before her speech to Parliament. The document confirmed tax hikes totaling £26 billion by 2029-30 and downgraded economic growth forecasts for the next four years.
The OBR document, which the budget watchdog released prematurely on its website, showed the UK economy will grow more slowly than predicted. While growth will reach 1.5% this year – up from the earlier 1% prediction – the outlook darkens sharply from 2026 onwards. The OBR cut growth forecasts from 1.9% to 1.4% for 2026, and growth will remain at 1.5% or below through 2029.
The leak marks the latest in a series of early disclosures that have plagued the run-up to the Budget, due at 12:30pm today in the House of Commons.
Tax Threshold Freeze Hits Millions
The leaked document confirmed the government will extend the freeze on personal tax thresholds for three years to 2030/31. This "stealth tax" measure will pull nearly 1.7 million more people into higher tax brackets or into paying income tax for the first time.
By 2029/30, the freeze will create 780,000 more basic-rate taxpayers, 920,000 more higher-rate payers, and 4,000 more additional-rate payers. The move will rake in about £8 billion annually for the Exchequer.
The government will charge £4.7 billion from National Insurance on salary-sacrificed pension contributions.
The budget will raise £2.1 billion from increasing tax rates on dividends, property, and savings income by two percentage points.
Two-Child Benefit Cap Scrapped
The OBR document revealed the government is removing the two-child benefit cap at an estimated cost of £3 billion by 2029-30. The measure represents a significant shift in welfare policy.
A high-value council tax surcharge on properties worth more than £2 million will raise £0.4 billion in 2029-30.
The 5p cut in fuel duty will remain in place until September 2026 before the government reverses it through a staggered approach.
Government Headroom Widens
The amount of headroom the Government has against the Chancellor's day-to-day spending rule will widen to £22 billion in 2029-30 – £12 billion more than in March. However, the OBR projects debt will rise from 95% of GDP this year to 96.1% by the end of the decade.
The Budget also includes confirmed measures on minimum wage increases. The National Living Wage for workers aged 21 and over will rise 4.1% to £12.71 per hour from April, boosting gross annual earnings for full-time workers by £900 and benefiting about 2.4 million low-paid workers. For 18-20-year-olds, the National Minimum Wage increases 8.5% to £10.85 per hour.
The government will freeze rail fares, saving commuters on expensive routes over £300 annually.
NHS prescription costs in England remain at £9.90.
Note: This article was created with Artificial Intelligence (AI).
