OBR economic forecasts

• The Office for Budget Responsibility’s latest forecasts are set out below. Figures in brackets are comparisons with the spring forecast.

Growth

• 2026: 1.2% (1.1%)
• 2027: 1.0% (1.6%)
• 2028: 1.6% (1.6%)
• 2029: 1.8% (1.5%)
• 2030: 1.7% (1.5%)
• 2031: 1.6% (new forecast)

CPI inflation

• 2026: 3.1% (2.3%)
• 2027: 3.4% (2.0%)
• 2028: 2.1% (2.0%)
• 2029: 2.1% (2.0%)
• 2030: 2.0% (2.0%)
• 2031: 2.0% (new forecast)

Public sector net borrowing 

• 2026/2027: 4.2% (3.6%)
• 2027/2028: 3.4% (2.9%)
• 2028/2029: 2.9% (2.5%)
• 2029/2030: 2.1% (1.8%)
• 2030/2031: 1.8% (1.6%)
• 2031/2032: 1.8% (new forecast)

Unemployment 

• 2026: 5.0% (5.3%)
• 2027: 5.1% (4.9%)
• 2028: 4.9% (4.4%)
• 2029: 4.5% (4.2%)
• 2030: 4.3% (4.1%)
• 2031: 4.1% (new forecast)

Tax and Duties

Income tax
No change to the main Personal Allowance.
Pension Tax Allowance
A new Pension Tax Allowance will be introduced from April 2027. It is intended to ensure that people above State Pension age whose total income is no more than the full new State Pension do not have to pay small amounts of income tax because the State Pension is higher than the Personal Allowance.
Tax on property income
From April 2027, separate income tax rates will apply to property income in England, Wales and Northern Ireland:

• 24% at the property basic rate
• 44% at the property higher rate
• 49% at the property additional rate

These are rates for property income. They are not a general increase in the main Income Tax rates applying to earnings and pension income.
Tax on savings income
From April 2027, the income tax rates applying to savings income will increase by 2% across the UK:

• 24% at the savings basic rate
• 44% at the savings higher rate
• 49% at the savings additional rate

These are rates for savings income. They are not a general increase in the main Income Tax rates applying to earnings and pension income.

 
Pension death benefits
The Government will remove the two-year rule that can affect the tax treatment of certain pension death benefits. The change will apply to relevant payments made on or after 28 October 2026.
Removing the rule does not mean that every pension death benefit payment will be tax free. The treatment may still depend on the type of benefit, the member’s age when they died, who receives the benefit and whether the relevant conditions are met.

Capital Gains Tax

Business Asset Disposal Relief
The lifetime limit for Business Asset Disposal Relief will reduce from £1 million to £500,000 for qualifying disposals made on or after 6 April 2027.

Founders’ Relief
A new Founders’ Relief will be introduced from 6 April 2027. It will provide a 10% CGT rate on up to £10 million of qualifying lifetime gains made by eligible founders of high growth, innovative companies.

Individual Savings Accounts

Cash ISAs
The planned reduction in the Cash ISA limit for people under 65 will not go ahead. The Cash ISA subscription limit will remain at £20,000 for adults of all ages.
The Government will also work with the industry to explore a new incentive for people investing in a Stocks and Shares ISA for the first time.

First Time Buyer ISA
The Government plans to introduce a new First Time Buyer ISA from April 2029. It will replace the Lifetime ISA for new savers. Under the announced proposal:

• the Government will add a 25% bonus when money is withdrawn for an eligible first-home purchase
• the property may be worth up to £450,000
• the maximum Government bonus will be £20,000

Existing Lifetime ISA holders will be able to continue contributing to and using their accounts under the current rules.

Lifetime ISA withdrawal charge
From 29 October 2026, the Lifetime ISA withdrawal charge will reduce from 25% to 20% where money is withdrawn to buy a first home costing more than the £450,000 property price limit. The 25% charge will continue to apply to other unauthorised withdrawals.

Work and benefits

National Living Wage and National Minimum Wage
The National Living Wage will increase by 3.9% to £13.21 an hour. The National Minimum Wage for workers aged 18 to 20 will also increase by 3.9%, to £11.27 an hour.

State Pension Triple Lock
The Government plans to change how the State Pension Triple Lock works from April 2030.

Energy

Household Energy Payment
From January 2027, the Government will provide a £100 Household Energy Payment for eligible households in council tax bands A to D in England.

Energy standing charges
The Government intends to abolish standing charges on domestic gas bills in Great Britain by the end of 2027, or as soon as possible afterwards, and move the relevant costs into unit rates.
This will change how the costs are collected. It will not remove those costs from the energy system and will not necessarily reduce every household’s total bill. The Government has also committed to reforming electricity standing charges and expects to publish further details in 2027.

Energy Cost Control Framework
The Government plans to introduce a Cost Control Framework as part of the 2027 Spending Review. The framework will set budgets for specified parts of energy costs.

Devolution
The Government will publish a Fiscal Devolution Roadmap setting out proposed changes to the funding of regional government. The plans include bringing mayors into the Business Rates Retention system from 2027/2028 and giving them a share of income tax revenue from 2028/2029.

Housing

Your First Home Scheme
The Government plans to introduce the Your First Home Scheme to support 70,000 first-time buyers. Under the announced proposal, eligible buyers will be able to receive a Government equity loan of up to 20% of the property value. Participants will also benefit from a lower deposit requirement and an interest-free period of five years. The scheme is not yet available.