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Rachel Rivz is at risk of violation of his budget rules after leaving himself “very thin” fiscal buffers, warns the OECD because the UK Chancellor urged to increase tax revenues.
On Tuesday, the OECD reduced growth forecasts in the UK and urged the work to intensify the efforts to strengthen its budget room at a time when the UK faced “significant risks of growth”.
The UK economic impetus weakens, according to the OECD in its last global forecast, as it cut the growth forecast in 2025 to 1.3 percent, from 1.4 percent in March. The output will expand only 1 percent in 2026, the OECD added, milder than in the previous 1.2 percent of the forecasting.
The Paris OECD has stated that a “balanced approach” to public finance should combine targeted costs with new tax raising measures. These include “measures to increase income, such as reassessment of tax ranges based on updated property values”, as well as removing “distortions” in the tax system.
“The state finance state is a significant risk of lack of outlook if financial rules are fulfilled,” the intergovernmental organization said. “Currently, very thin fiscal buffers can be insufficient to provide proper support without violating financial rules in the event of new adverse upheavals.”
Ministers move Rare budget department On the eve of the review of government spending next week, while Downing Rate also holds calls from Backbench MPS for planned well -being. Pressure on the Reiva will probably intensify on the eve of the autumn budget, especially when the budget department lowers its growth forecasts.
The Treasury of the UK will face the constant tension from increasing payments, the OECD said. He predicted that gross state debt would grow as a GDP share over the next two years, leaving it above 104 percent in 2026 compared to 101.3 percent in 2024.
“To solve all these problems, especially if you already have a very high debt, you need to work on the side of the income and the cost of expenses; that is why it is very important to follow the financial rules and the ability to maintain fiscal discipline,” said Alvar Pereira, the chief economist of the OECD, in an interview.
Inflation will remain Above the target This year, having passed 3.1 percent before falling up to 2.3 percent in 2026, the OECD noted. But given the unsuccessful growth, the Bank of England should continue to reduce its main interest rate from 4.25 percent to 3.5 percent in the second quarter of 2026.
“The impetus weakens when the business moods are rapidly deteriorating,” the OECD said, adding that consumer confidence remains “depressed”. Meanwhile, surveys of new export orders have fallen given Increase in tariffs facing UK exports In the US, even after the trade pact struck between the Trump administration and Sir Keira Starmer.
“The UK was the fastest growing economy in the G7 in the first three months of this year, and the interest rates were reduced four times, but we know what else,” Rivz said. “I determine the determination to go on and faster to put more money in people’s pockets through our plan for change.”
