OBR slashes UK 2027 growth forecast as Middle East war weighs on economy

■ Steady

Healey's first budget offers household help as OBR cuts 2027 growth forecast

Chancellor John Healey delivered the Burnham government's first budget on Wednesday, announcing a £100 payment for 20m households and an extension of a VAT cut on electricity bills. The Office for Budget Responsibility sharply downgraded its growth and living standards outlook, citing the Middle East war. On Thursday, Healey said the welfare bill will fall before the next election, while OBR documents suggest sickness and disability benefits will cost £100bn a year before the end of the decade.

• The £100 payment goes to households in council tax bands A to D and costs £2.6bn; the VAT cut on electricity bills is extended to next July.
• The budget helps pensioners and households, while banks and betting shops face higher payments.
• Healey promised a tough approach to young people who refuse jobs or training.
• The British Retail Consortium said shop price inflation rose to 2.1% in October from 1.4% in September, the highest since 2024.