Inflation and unemployment are set to be higher than expected in 2025 and 2026, according to forecasts published early by the Office for Budget Responsibility.

It came as the UK’s official forecaster also reported that economic growth will be weaker than expected from 2026 to the end of the current Labour government, as the tax burden on the economy continues to rise.

Nevertheless, the OBR said the UK economy is set to grow by 1.5% in 2025, in an upgrade from its previous prediction of 1% from its March outlook.

However, this is set to slow to 1.4% next year. The forecaster had previously predicted a reading of 1.9% for the year.

It also downgraded growth in 2027 from 1.8% to 1.5%, in 2028 from 1.7% to 1.5%, and in 2029 from 1.8% to 1.5%.

Meanwhile, the OBR said UK inflation is set to

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