UK economy set to grow 1.2% this year, slow in 2027, Healey says in budget speech

Live updates

1. 1h ago

   UK Growth Forecast Slashed to 1% for 2027 in Healey Budget

   UK Chancellor John Healey delivered his first budget, announcing that gross domestic product is projected to expand by 1.2 per cent this year before slowing to 1 per cent next year. Citing official projections from the Office for Budget Responsibility, Healey navigated a difficult economic moment shaped by global shocks. The fiscal package includes a £100 energy bill payment for millions of households and a 3 per cent increase in the bank surcharge. Healey also accepted a smaller fiscal buffer as the government works to steer the economy through international pressures.

   Why it matters

   The updated economic outlook reflects severe headwinds from international conflicts, specifically citing the impact of the Iran war on the domestic economy. The growth projection for 2027 marks a substantial downward revision from the 1.6 per cent forecast previously issued by the Office for Budget Responsibility in March. Economists criticised the package for offering only fiddly measures that fail to significantly alter long-term growth trajectories.

   What is confirmed

   • UK gross domestic product is set to improve by 1.2 per cent this year before slowing in 2027.
   • Britain's economy is forecast to grow by 1 per cent next year, according to projections from the Office for Budget Responsibility cited by John Healey.
   • John Healey announced a £100 energy bill payment for millions of households.
   • The budget implements a 3 per cent rise in the bank surcharge.
   • The previous growth forecast for 2027 was 1.6 per cent in the outlook published in March before the start of the Iran war.

   Still unconfirmed

   • Economists warned the budget offered only a raft of fiddly measures with very little to move the dial on growth.

   What to watch next

   • Further assessments from independent economic institutes on the feasibility of the revised fiscal buffer
   • Parliamentary debates and votes on the specific tax and spending measures announced in the budget
   Sources used for this update (12)

   1. Reuters — Healey seeks to steer UK through 'difficult moment' with low-key budget
   2. The Guardian — Budget 2026 live: Healey announces £100 energy payment for millions and 3% rise in bank surcharge
   3. Reuters — UK budget: Healey accepts smaller fiscal buffer after global shocks hit economy
   4. Yahoo — Budget 2026: Millions of UK households to get £100 energy bill payment – check if you’re eligible
   5. Sky News — Budget 2026: The key points at a glance
   6. www.gov.uk — Budget 2026 speech - GOV.UK
   7. finance.yahoo.com — UK economic growth downgraded to 1% in 2027, Healey says in ...
   8. www.independent.co.uk — UK growth forecast slashed to 1% for next year amid Iran war ...
   9. www.globalbankingandfinance.com — UK Economic Growth Downgraded to 1% for 2027 in New Budget ...
   10. www.the-independent.com — What a slowing economy means for Brits as UK growth forecast ...
   11. www.euronews.com — UK budget: Here’s five key takeaways from the Chancellor’s speech
   12. live.euronext.com — UK economic growth downgraded to 1% in 2027, Healey says in ...
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