The Office for Budget Responsibility (OBR) has lowered its real gross domestic product (GDP) forecast by 0.3 percentage points to 1.5% on average over the course of the current Government.

Chancellor Rachel Reeves announced in the Autumn Budget that while the OBR has increased its growth estimate for the current financial year from 1% to 1.5%, this growth would slow to 1.4% in 2026 and 1.5% for the following four years.

These figures are downgrades from forecasts outlined in March.

The OBR stated that lower productivity growth was behind this weaker growth forecast. It added that significant rebounds from recent negative shocks have not materialised.

While the Budget mainly focused on tax reforms to the personal finances of those in higher tax bands, Evelyn Partners noted that there are also "major impacts" for business owners as well.

These include an increase in the national living wage and a rise in National Insurance costs for employers that provide salary sacrifice pension schemes.

Partner in financial planning at Evelyn Partners, David Little, stated: "Business owners will also be impacted by hikes in fuel duty from September 2026 and a smorgasbord of other taxes, including gaming tax changes, that will affect individual sectors differently. This latest round of increased overheads will likely further fuel unemployment as businesses review their staffing levels.

"Now, business owners must rally again and find the impetus to push forward in the face of multiple new challenges, including the impact from the impending Employment Rights Bill."

Investment strategist at Quilter, Lindsay James, said that while Reeves has attempted to spin the OBR’s forecasts, "it is clear that reality is far from rhetoric".

She concluded: "Economic growth forecasts for 2025 may have been upgraded, but productivity has been downgraded, inflation is expected to be higher and spending is going up. Indeed, borrowing is rising and only being cut towards the end of the forecast period.

"Compared to March’s forecast, it is estimated to be £21bn (0.7%of GDP) higher in 2025/26, but still lower by £6bn (0.2% of GDP) in 2029/30, resulting from some of the more significant tax raising measures not kicking in until 2028, bringing some added uncertainty over its revenue-raising potential.

"For now, however, Reeves and this Government continue to hope that growth somehow returns and inflation falls. The trouble is that many of the measures announced by Reeves today are untested, such as a mansion tax. Distortions and unexpected behaviour changes will occur and as such make some of these forecasts at risk of further cuts."

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