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

AI desk brief

The OBR cut UK 2027 growth to 1.0% from 1.6% and warned inflation could run near 4% as the Middle East energy shock feeds through to households and public finances. It also said the government faces £14bn more in debt interest, with oil above $115/bbl and gas almost tripled since the Iran conflict escalated.

For metals, the key transmission is stagflationary: higher energy costs, stickier inflation and wider fiscal pressure can keep real yields and policy uncertainty in focus, even as the economy slows. The OBR said outcomes are highly uncertain, with a higher energy-price path potentially adding £17bn to borrowing next year, while a lower path could trim borrowing by £12bn.