Treasury launches leak inquiry over reports OBR has cut UK growth forecast
The watchdog is reported to have cut its growth forecast for the UK, causing problems for the Chancellor as she attempts to stick to her fiscal rules.
The Treasury will launch a leak inquiry following reports the Government’s economic watchdog had downgraded its economic growth forecast, the department’s top official has said.
Bloomberg reported that the Office for Budget Responsibility (OBR) cut its projections for economic growth in a forecast handed to Chancellor Rachel Reeves last week.
OBR assessments are meant to remain confidential until they are officially published.
On Wednesday, Treasury permanent secretary James Bowler told the Commons Treasury Committee that his department would be “investigating and following it up as a potential leak”.
He said: “It is important to put a ring around those forecasts and make sure they are not in the public domain.
“The OBR, ministers and officials need to interact with each other. As new information becomes available, they need to do that privately, so that would be a very serious and very unwelcome undertaking.”
The Chancellor is due to provide an update on the outlook for the economy on March 26, and a reduced growth forecast from the OBR could mean she needs to cut spending in order to meet the rules on debt and borrowing she set for herself in October.
Mr Bowler declined to comment on the reported content of the OBR forecast, saying this would be “deeply unwelcome” as the projections are “extremely market sensitive”.
Meanwhile, Downing Street has sought to strike a more positive note, with the Prime Minister’s official spokesman pointing to other organisations that had upgraded their forecasts for the UK economy.
Saying he would not “get ahead of the OBR forecast”, the spokesman said: “In recent weeks and months the OECD and the IMF have upgraded our growth forecast over the next three years.
He added: “The Government remains relentlessly focused on growth as the only way of sustainably raising living standards and delivering the investment that we need in our public services.”
In December last year, the OECD increased its forecast for UK growth in 2025 from 1.2% to 1.7%, while in January the IMF slightly upgraded its prediction to 1.6% growth.
But last week the Bank of England halved its growth expectations for this year, suggesting the economy would only expand by 0.75% before accelerating to 1.5% in 2026 and 2027.
The OBR forecasts will have a more direct impact on the Chancellor’s decisions as they are used to determine whether she is on course to meet her fiscal rules.
Conservative shadow chancellor Mel Stride said reports of a downgraded OBR forecast showed the Government “needs to stop playing politics and come up with some serious solutions to the significant economic problems they’ve created”.
He said: “With the Bank of England predicting growth falling and inflation rising, it is clear that this Chancellor needs to make urgent course corrections before the damage she is doing to the economy becomes permanent.”
Liberal Democrat deputy leader and Treasury spokeswoman Daisy Cooper said the leak “suggests that Rachel Reeves has blown her budget and the country’s financial safety net with it”.
She added: “The Chancellor’s jobs tax has sucked the life out of the economy. She needs to urgently come up with a plan B to get the economy growing, including a new trade deal with the EU.”
Reports of a downgraded OBR forecast come ahead of the publication of the latest GDP growth figures on Thursday, which cover the period up to the end of 2024 and will provide an indication of whether the economy expanded or contracted during Labour’s first six months in power.
The previous release showed 0% growth in the third quarter of 2024, and growth of less than 0.1% in December would mean the economy shrank slightly in the last three months of the year.
