The tax burden will hit a new record high after Rachel Reeves's spring statement (Image: PA)
The tax burden will hit a new record high amid a slump in economic growth, shocking new figures have revealed. The Office for Budget Responsibility (OBR) said taxes would rise from 35.3% of gross domestic product (GDP) to a historic high of 37.7% in 2027-28.
This is more than four percentage points above the pre-pandemic level of 33.2% in 2019-20. The budget watchdog also halved its growth forecasts this year, from two 2% to 1%. It added that Britain’s economy would grow by 1.9% in 2026, 1.8% in 2027, 1.7% in 2028 and 1.8% in 2029. The OBR forecasts that inflation will average 3.2% this year, before falling to 2.1% in 2026 and then 2% from 2027.
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The Chancellor in the House of Commons on Wednesday (Image: PA)
Shadow Chancellor Mel Stride said: “She chose to be reckless with a sliver of headroom against her fiddled targets. She borrowed and spent and taxed like it was the 1970s.
“The Chancellor likes to tour the television studios and tell everybody they should be thankful that she will not be ramping up taxes in this ‘emergency Budget’ as she did before.
“But that will be cold comfort to the millions up and down the country waiting in fear and trepidation for the start of the new tax year, buckling under the burden of tax that’ll be rising to the highest tax burden on her watch in the history of our country.
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"She taxed jobs and wealth creation, she’s destroyed livelihoods, businesses clobbered big and small companies – the backbone of our economy, enterprise – crushed on the altar of her ineptitude."
UK economic growth forecasts have been slashed in half for this year as inflation increases more sharply, according to the fiscal watchdog.
The OBR said on Wednesday that it expects UK GDP to rise by 1% in 2025.
Ms Reeves pledged to tear down red tape and increase investment more quickly after the forecast was reduced from a previous prediction of 2%.
The fresh predictions came as the Chancellor blamed “increased global uncertainty” for impacting on the economy.
Meanwhile, UK inflation is now expected to average 3.2% this year, according to the OBR. It represents a significant increase against the OBR’s previous forecast of 2.6%.
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Earlier on Wednesday, the Office for National Statistics (ONS) revealed that inflation slowed down to 2.8% in February, although the Bank of England still expects inflation to peak at around 3.7% in September this year.
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The OBR has forecast that inflation will slow significantly in 2026 to 2.1% - below its original prediction from October last year.
It said this slowdown will be driven by an easing of energy prices and weaker wage growth.