Official forecaster slashes UK growth to 1% next year as the Chancellor warns of 'global economic storms' from Iran war

From the Newshound archive · first published 28 October 2026.

The Office for Budget Responsibility published its autumn Budget forecasts on Wednesday, cutting the UK's 2027 growth outlook from 1.6% to just 1%, with inflation expected to surge to a peak of around 3.75% by early next year. Chancellor John Healey blamed the downgrade on 'global economic storms' tied to the Iran war, warning that rising borrowing costs have already slashed the UK's fiscal headroom by £14 billion. Growth is expected to recover to 1.6% in 2028 and reach 1.8% by 2029. The OBR warned that 'repeated adverse shocks since 2008 have contributed to persistently weak GDP growth'.

Healey confirmed fiscal headroom will be cut to £15 billion in 2029/30, down from £26 billion previously forecast.

UK households and businesses face mounting pressure as accelerating inflation squeezes spending power alongside the slowdown.

The OBR noted UK government debt is now 'high by both recent historical and international standards'.