OBR slashes UK growth forecast for 2027 despite Healey’s budget measures

Outlook for living standards also downgraded as part of impact of Middle East conflict on economy

Britain’s economy has taken a multibillion-pound hit as the war in the Middle East drags down growth and triggers a fresh cost of living crisis, according to the government’s independent forecaster.

In a report as John Healey announced his first budget, the Office for Budget Responsibility (OBR) issued a sharp downgrade for growth, living standards and the public finances despite the measures taken by the chancellor.

Although Healey sought to cushion the blow through “breathing space” policies to help households and businesses with soaring energy costs, the watchdog slashed its growth forecasts for 2027 and warned that inflation was poised to reach close to 4% as Britain’s early resilience to the war fizzles out.