By Sterling and UK government bonds rose on Wednesday after the Office for Budget Responsibility published its forecasts ahead of schedule, delivering a more optimistic near-term assessment of Britain’s economic and fiscal position.
The unusual early release, which came hours before Chancellor Rachel Reeves was due to present her annual Budget, injected volatility into both markets and Westminster.
The pound climbed to a session high of $1.32 from around $1.3153 prior to the OBR publication.
UK equities also strengthened, with the FTSE 100 up 0.4%.
The earlier rally in gilts lost momentum, with the 10-year yield steady at 4.50%, as investors take in the implications of the latest official forecasts.
Early OBR release sparks political tension
The timing of the OBR forecasts — appearing before Reeves’ statement — broke from customary practice.
Typically, the independent watchdog publishes its analysis after the chancellor speaks.
It remains unclear whether the early release was a procedural mistake or a leak.
The OBR later apologised for the technical error in a post on the social media website X.
A link to our Economic and fiscal outlook document went live on our website too early this morning. It has been removed. We apologise for this technical error and have initiated an investigation into how this happened. We will be reporting to our Oversight Board, the Treasury,
The deviation prompted immediate political criticism. Kemi Badenoch said the buildup to the Budget had been the “most chaotic” in living memory and pointed to the early publication as evidence of a “complete shambles.”
Starmer responded by referencing the market turmoil triggered by Liz Truss’s mini-Budget, calling that episode “the biggest shambles.”
Improved borrowing path but higher debt
The OBR said public borrowing is projected to decline from 4.5% of GDP in 2025–26 to 1.9% in 2030–31.
Debt, however, will rise from 95% of GDP this year to 96% by the end of the decade — two percentage points higher than forecast in March and roughly double the average level of advanced economies.
The watchdog noted that without policy adjustments, adverse developments since March would have eliminated Reeves’ headroom to meet her fiscal rule of balancing the current budget by 2029–30.
After factoring in policy changes, the chancellor now has £22 billion in headroom, up from £9.9 billion in March.
The OBR cautioned, however, that this buffer remains “small” relative to the forecast risks and the complexity of the tax changes involved.
Growth outlook strengthened for 2025
Economic growth estimates also shifted.
The OBR revised its 2024 forecast to 1.5%, up from its earlier 1% projection, citing a stronger-than-expected start to the year.
However, the 2026 outlook has been lowered to 1.4% from 1.9%, reflecting more subdued momentum in the medium term.
The updated projections arrive at a crucial political moment.
Keir Starmer, who chaired a cabinet meeting ahead of Prime Minister’s Questions, said ministers had delivered “balance, stability and fairness” in the Budget.
He stressed that the plan was “not a spreadsheet exercise” but a matter of national priorities, arguing the government had chosen “renewal” over decline.
Reeves presented the Budget to ministers following the cabinet session.
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