The Office for Budget Responsibility (OBR) has updated its economic and fiscal projections through 2030–31, incorporating data and policy changes following the November 2025 Autumn Budget. Real GDP is now expected to grow at an average of 1.5% annually, 0.3 percentage points below the March forecast, primarily due to a downward revision in underlying productivity growth to 1.0% from 1.3%.
Despite slower output expansion, nominal GDP growth remains relatively resilient. This is driven by higher-than-expected inflation and stronger wage growth, which together boost tax receipts. Cumulative nominal GDP growth is only 0.9 percentage points lower than previously projected, supported by a shift in income composition—labour income and consumption now account for a larger share, both of which carry higher effective tax rates than corporate profits.
Tax revenues are forecast to rise significantly, reaching over 38% of GDP by 2030–31, a historical peak. This increase stems from frozen personal tax thresholds and new measures such as taxing pension contributions made via salary sacrifice and raising levies on dividends and savings. These changes are expected to add £26 billion to receipts by 2029–30.
On the spending side, outlays are also higher, increasing by £22 billion by 2029–30 compared to the prior forecast. Key drivers include rising welfare costs linked to inflation and disability claims, higher debt interest, and growing local authority expenditures—particularly in special educational needs. Budget policies add £11 billion to spending by 2029–30, mainly through reversing welfare cuts and lifting the two-child benefit limit.
As a result, public sector borrowing is projected to decline from 4.5% of GDP in 2025–26 to 1.9% by 2030–31. Net debt will peak at 97% of GDP in 2028–29 before slightly receding. While the fiscal outlook shows consolidation, risks remain, including uncertainty around productivity trends, financial markets, and pressures on health, education, and asylum systems.
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Economic and fiscal outlook – November 2025
Foreword n nThis Economic and fiscal outlook (EFO) sets out our central forecast and the uncertainties that surround it for the five years to 2030-31, taking account of recent data and government policies announced since our last forecast and up to and including the November 2025 Autumn Budget. The forecasts presented in this document represent our collective view as the three independent members of the OBR’s Budget Responsibility Committee (BRC). We take full responsibility for the judgements that underpin them and for the conclusions we have reached. n nAs always, we have been greatly supported in our work by the staff of the OBR. We are very grateful for their hard work and expertise. We have also drawn on the work and expertise of officials across government in preparing these forecasts. We are grateful for their engagement and insight. n nDuring the production of this forecast we learned that a respected former colleague, Pavandeep Dhami, sadly passed away. Pav worked at the OBR in its first five years and played a huge part in laying the OBR’s analytical foundations, which we have continued to build upon over the past decade and benefit from today. He will be sadly missed by current and former OBR staff. n nThe date for this forecast was announced on 3 September, giving two weeks more than the ten weeks’ notice required by the Memorandum of understanding between the Office for Budget Responsibility, HM Treasury, the Department for Work and Pensions and HM Revenue and Customs (MoU). n nWe published the timetable of the key stages of the forecast on 17 September, once it had been agreed by signatories of the MoU. Given the unusual volume of speculation on the subject prior to the publication of this EFO, the Chair has taken the unusual step of writing to the Chair of the Commons Treasury Committee to set out the facts concerning the evolution of our forecast over the course of the past four months. A copy of this letter is available on our website. n nThe timetable for the production of this forecast was as follows: n nWe undertook our regular summer review of the supply side of the economy, which enables us to focus on the key drivers of potential output, a foundation stone of our economy forecast, in slower time and outside of the full forecast round. It also allows us to make judgements that feed into the first round of the forecast process for the Autumn Budget and thereby inform policy development at the earliest opportunity. We informed the Treasury of the outcome of the review on 7 August. n nOn the fiscal side, we initiated a process of reviewing fiscal forecast models and judgements as part of a fiscal baseline review over the summer, prior to the main forecast process. This process, along with the supply side review, was designed to reduce the volatility of our forecast between rounds to support a smoother policy development process within government. Partly as a result, our pre-measures forecast displayed less variation from round to round than has previously been the case. n nFollowing the conclusion of the supply-side review, fiscal baseline review, and confirmation of the timetable, OBR staff prepared an initial economy forecast, drawing on data released since our previous forecast in March 2025 and incorporating our preliminary judgements on the outlook for the economy. This economy forecast was sent to the Treasury on 17 September. n nUsing the economic determinants from this forecast (such as the components of nominal income and spending, unemployment, inflation, and interest rates), we commissioned updated forecasts from the relevant government departments for the various tax and spending items that in aggregate determine the position of the public finances. We discussed these in detail with the officials producing them, which allowed us to investigate proposed changes in forecasting methodology and to assess the significance of recent tax and spending outturn data. In many cases the BRC requested changes to methodology and/or the interpretation of recent data. This first fiscal forecast was finalised on 2 October, and we sent a note that described the main elements of it to the Chancellor the following day. n nAs the process continued, we identified further key judgements that we would need to make for our economy forecast. Where we thought it would be helpful, we commissioned analysis from the relevant teams in the Treasury. We then produced a second pre-measures economy forecast, which incorporated the latest data, and the economic implications of our first fiscal forecast. n nThis second economy forecast provided the basis for the next round of fiscal forecasts. Discussions with HM Revenue and Customs (HMRC), the Department for Work and Pensions (DWP) and other departments, gave us the opportunity to follow up our requests for further analysis, methodological changes, and alternative judgements from the previous round. We finalised our second fiscal forecast on 17 October and sent a summary of the forecast to the Chancellor on 20 October. n nWe then produced a third and final pre-measures economy forecast, in which we took on the latest data and incorporated judgements embodied in our fiscal forecast. This final pre-measures economy forecast was based on financial and energy market data averaged over the 10 working days to 10 October. It was sent to the Treasury and other government departments that produce tax and spending forecasts on 23 October. n nThe agreed timetable required us to close the pre-measures economy and fiscal forecasts earlier than we have previously, to increase the time at the end of the process for the Government to finalise the policy package on the basis of a stable forecast. Given the time between the closure of the pre-measures economy forecast and the publication of our EFO, we decided prior to the start of the forecast process in the summer to take a later window for Bank Rate and gilt yields for the final pre-measures fiscal forecast, which were averaged over the 10 working days to 21 October. This results in very minor discrepancies between the economy and fiscal forecast which we judge to be immaterial, and outweighed by having a more up-to-date set of interest rate assumptions in our fiscal forecast. In practice, the difference between interest rate assumptions used in the economy and fiscal forecasts is very small, with interest rates in the fiscal forecast lower by an average of 0.1 percentage points. n nThe final pre-measures fiscal forecast, incorporating these later interest rate assumptions, was finalised on 30 October, and sent to the Chancellor the following day on 31 October. No further adjustments were made to our economy or fiscal forecasts after this, other than to take account of the impact of policy measures provided by the Treasury. n nIn parallel to the production of the forecast, we scrutinised the costing of individual tax and spending measures announced since our March 2025 forecast. As usual, OBR staff and the BRC requested further information and/or changes to almost all the draft costings prepared by HMRC, DWP and other departments. We also undertook a process of engagement and analysis to assess the policy measures included in the Budget that we deemed could have specific effects on our economy forecast. This involved several rounds of engagement with the Treasury and other government departments as both the specification of policies, and our assessment of their impact, were refined. n nWe made an initial assessment of the economic and fiscal effects of the emerging policy package that was provided by the Treasury on 4 November. We incorporated this package into an initial post-measures forecast, to provide an early view on the effect of policy measures on the economy and public finances, which we sent to the Chancellor on 10 November. This forecast round was produced using our internal ready-reckoner models (rather than being sent to departmental forecasters). n nIn line with the agreed timetable, on 12 November the Treasury provided the final package of measures that would cause movements in our economy forecast. We sent the resulting final economy forecast to the Treasury on 17 November and a near-final fiscal forecast on 18 November. Final policy decisions, that would only affect the fiscal forecast, were returned by the Treasury on 20 November, a day later than anticipated in the agreed timetable, and our forecast was then finalised and sent to the Treasury on 21 November. n nThe Treasury made a written request, as provided for in the MoU between us, that we provide the Chancellor and an agreed list of her special advisers and officials with a near-final draft of the EFO on 21 November. This allowed the Treasury to prepare the Chancellor’s statement and accompanying documents. We also provided pre-release access to the full and final EFO on 24 November. n nAlongside producing the forecast, we prepared two supplementary briefing papers that have been published at the same time as this EFO: Briefing paper No.9: Forecasting productivity, which summarises the analysis and conclusions of our supply-side review; and Briefing paper No.10: Accounting for the supply-side effects of policy, which provides the conclusions of our review of the criteria for scoring the supply-side effects of policies that was recommended by our recent external review. These papers were shared with the Treasury on 11 November and 20 October respectively. n nThe agreed forecast timetable was largely adhered to, with the exception of the finalisation of the policy package. Small changes were made to the parameters of three policy measures following the costings certification deadline, meaning that, although we have no concerns about the methodologies used, we have not been able to certify these costings but have used the Government’s estimates of their fiscal impact and will return to them at our next forecast. In addition, one policy measure with direct effects on our economy forecast was altered after it had been finalised. Had we been able to incorporate this, it would have only made a small difference to our final economy forecast. n nDuring the forecasting period, the BRC held dozens of scrutiny and challenge meetings with officials from other departments, in addition to numerous further meetings at staff level and with external stakeholders. We have been provided with all the information and analysis that we requested and have come under no pressure from Ministers, advisers, or officials to change any of our conclusions. The BRC met with the Chancellor on two occasions to discuss the forecast over the course of its production (on 10 October and 30 October). A full log of our substantive contact with Ministers, their offices and special advisers can be found on our website. This includes the list of special advisers and officials who received the near-final draft of the EFO on 21 November. n nWe would be pleased to receive feedback on any aspect of the content or presentation of our analysis. This can be sent to [email protected]. n nThe Budget Responsibility Committee n nRichard Hughes, Professor David Miles CBE and Tom Josephs n nChapter 1: Executive summary n nOverview n n1.1 Real GDP is forecast to grow by 1.5 per cent on average over the forecast, 0.3 percentage points slower than we projected in March, due to lower underlying productivity growth. But cumulative real wage growth and inflation over the next two years are forecast to be around ¾ and ½ a percentage point higher than in March respectively. This means that total growth in nominal GDP over the forecast is only around 1 percentage point lower than in March and is more tax rich, thanks to a larger share accruing to labour income and consumption. This, combined with frozen personal tax thresholds, boosts pre-measures tax receipts by amounts rising to £16 billion by 2029-30 relative to our March forecast. But pre-measures spending is also higher in every year and by £22 billion in 2029-30 due to higher spending by local authorities and on welfare and debt interest. The net result is a modest medium-term deterioration in the pre-measures fiscal outlook, with borrowing £17 billion higher this year but only £6 billion higher in 2029-30 compared to our March forecast. n n1.2 Against this backdrop, Budget policies increase spending in every year and by £11 billion in 2029-30, primarily to pay for the summer reversals to welfare cuts and lift the two-child limit in universal credit. The Budget also raises taxes by amounts rising to £26 billion in 2029-30, through freezing personal tax thresholds and a host of smaller measures, and brings the tax take to an all-time high of 38 per cent of GDP in 2030-31. The net impact of Budget spending and tax policies increases borrowing by £5 billion on average over the next three years but then reduces it by £13 billion on average in the following two. n n1.3 Taking forecast and policy changes together, borrowing is projected to fall from 4.5 per cent of GDP in 2025-26 to 1.9 per cent of GDP in 2030-31. Debt rises as a share of GDP from 95 per cent of GDP this year and ends the decade at 96 per cent of GDP, which is 2 percentage points higher than projected in March and twice the debt level of the average advanced economy. The current balance target is met in 2029-30 with a margin that fell from £10 billion in the March forecast, to £4 billion in the pre-measures forecast, but is then boosted to £22 billion by Budget policies. This is close to the £21 billion average absolute revision in the fourth year of our pre-measures forecast between fiscal events, and around three-quarters of the £29 billion average margin set aside by previous Chancellors. But it is only around two-fifths of the median £54 billion difference between our forecast for borrowing and final outturn four years hence. It therefore remains a small margin compared to the uncertainties around our economy forecast, including the outlook for productivity, interest rates, equity prices, and earnings growth. It is also small by comparison to the wider risks around our fiscal forecast, which include risks from the uncertain yield from an array of complex tax changes, and pressures on welfare, health, education, asylum, defence, and local authority budgets. n nEconomic outlook n n1.4 We now forecast real GDP growth of 1.5 per cent in 2025, 0.5 percentage points faster than in our March Economic and fiscal outlook (EFO). This is because output growth was revised up in the second half of 2024 and growth was stronger than expected in the first quarter of 2025, at 0.7 per cent. The latter was partly due to the temporary frontloading of property transactions and exports, as households sought to avoid stamp duty threshold changes and businesses tried to get ahead of tariff increases, both of which came in from April. Growth then fell to 0.3 per cent in the second quarter, as these temporary factors unwound, and to 0.1 per cent in the third quarter, when the Jaguar Land Rover shutdown temporarily weighed on growth – both below our March forecast. We expect quarterly growth to pick up only gradually in the near term as geopolitical uncertainty persists and domestic business and consumer confidence remains subdued, including in anticipation of further tax rises. n n1.5 We have reduced our central forecast for the underlying rate of productivity growth in the medium term to 1.0 per cent, 0.3 percentage points slower than in our March forecast. The UK’s productivity performance has undershot our forecasts, despite several substantial downgrades since 2010, as a significant rebound from recent negative shocks has not materialised. The further reduction in this forecast is due to a lower forecast for underlying total factor productivity (TFP) growth, which we now forecast at 0.8 per cent rather than 1.1 per cent in the medium term. This decision is not a reflection of any particular government policies. Rather, it is based on our latest assessment of the UK’s productivity performance in historical and international context; what the latest output and labour force data tell us about the impact of shocks and underlying productivity of the economy; and how developments in global trade policy, the sectoral composition of output, the emergence of new technologies like artificial intelligence, and other structural trends are likely to affect the productive potential of the UK economy in the future.[1] n n1.6 With estimated medium-term growth in labour supply and capital deepening unchanged at 0.5 and 0.2 per cent respectively, medium-term potential output growth has been revised down by 0.3 percentage points to 1.5 per cent. Real GDP growth is expected to be steady at around 1.5 per cent over the forecast as TFP growth rises from 0.5 per cent this year to its new medium-term trend rate of 0.8 per cent in 2030, offsetting a continued slowdown in labour supply growth. The downward revision to our real GDP growth forecast – which reduces cumulative growth over the forecast by 1.3 percentage points – is offset by upward revisions to historical data and stronger-than-expected growth at the start of 2025, which raise the starting level of GDP by 1.1 per cent relative to March. This means that the level of GDP is only 0.1 per cent lower than March in 2029. We estimate that Budget policies temporarily boost demand by 0.1 per cent next year but have no significant impact on output by 2030.[2] n nChart 1.1: Real GDP growth and level n nSource: ONS, OBR n n1.7 The downward revision to productivity is not the only material change to our economy forecast since March – we have also revised up our near-term forecast for earnings growth and inflation. Relative to our March forecast, cumulative real wage growth over the next two years is just under ¾ percentage points higher and CPI inflation just over ½ per cent higher as surveys of wage settlement expectations have held up significantly more than we expected, and there is more momentum in domestically generated inflation than we anticipated. This means that, having risen by around 5 per cent in 2024, nominal weekly earnings are estimated to grow at close to the same rate in 2025 before falling to around 3½ per cent in 2026, with growth around 1 percentage point higher than the March forecast in both years. Nominal weekly earnings growth falls back further to an average of around 2¼ per cent a year from 2027 as labour market conditions loosen, inflation drops back, average weekly hours worked fall slightly, and companies rebuild margins and pass on more of the recent rise in employer National Insurance contributions (NICs) to real wages. n n1.8 Greater domestically generated inflation, alongside higher food prices, mean we also expect inflation to stay higher for longer than in March. In this forecast, higher food and services prices push CPI inflation up to 3.5 per cent in 2025 and 2.5 per cent in 2026, respectively 0.2 and 0.4 percentage points higher than the March forecast. These upward pressures on prices are only partly offset by a 0.3 percentage point reduction in inflation in 2026 from Budget policy measures, primarily those that reduce household energy bills. CPI inflation returns to the Bank’s 2 per cent target in 2027, a year later than in our March forecast. The increase in domestically generated inflation also means that cumulative growth in the GDP deflator is 0.5 percentage points higher than in our March forecast. n nChart 1.2: Hourly wage growth and CPI inflation n nSource: ONS, OBR n n1.9 The unemployment rate has been on a gradual upward trend since a post-pandemic trough of 3.8 per cent in 2022, and we expect it to remain close to its current rate of around 5 per cent until 2027. It then falls back to its estimated equilibrium rate of around 4 per cent over the forecast. The employment rate is expected to be broadly flat at around 61 per cent over the forecast, as a cyclical decline in the unemployment rate is offset by a structural fall in the participation rate from an ageing population and rising sickness-related inactivity. Growth in real household disposable income per person is projected to fall from 3 per cent in 2024-25 to around ¼ per cent a year over the forecast, slightly below our March forecast and well below the last decade’s average growth of 1 per cent a year. Weaker medium-term real wage growth and rising taxes explain the slower growth. Real GDP per person grows by an average of 1.1 per cent a year over the forecast, 0.3 percentage points slower than in March due to weaker productivity growth. n n1.10 Business profits are projected to fall in 2025 before picking up across the forecast, but by less than expected in March. We forecast that the real rate of return on capital will fall from around 12½ per cent in 2022 to a low of around 10¾ per cent in 2026 as real wage growth and settlement expectations hold up relative to subdued productivity growth. In the medium term, we forecast that firms are likely to try to rebuild their rate of return by keeping real wage growth below productivity growth, so we expect the rate of return to recover to around 11 per cent. We also project growth in business investment to be weaker over the forecast compared to March due to continued weakness in business sentiment, lower profit growth, and increases in long-term interest rates which have pushed up the cost of capital. n n1.11 The overall impact of these changes is that growth in the nominal economy has not been downgraded by as much as productivity, and the composition of nominal GDP growth is more tax rich than in March. Cumulative nominal GDP growth, a key driver of tax revenues, is only 0.9 percentage points lower than in March over the forecast, because the downward revision to real GDP growth is partly offset by the upward revision to inflation. Moreover, cumulative growth in corporate profits has been revised down by significantly more than nominal GDP – by around 6 percentage points – while cumulative growth in labour income has been revised up by 0.9 percentage points. These changes boost tax receipts, as labour income has an effective tax rate of around 40 per cent, whereas corporate profits have an effective tax rate of around 17 per cent. Consistent with these revisions to income, we also now expect a more tax-rich composition of expenditure growth over the forecast. Nominal consumption growth (which has an effective tax rate of 10 per cent) has been revised down by less than nominal GDP, while corporate investment growth (which has a negative short-term effective tax rate, due to investment allowances) has been revised down significantly more than nominal GDP growth. n nChart 1.3: Cumulative growth in nominal GDP: changes since March n nSource: ONS, OBR n nFiscal outlook n n1.12 The economy changes described above boost overall tax receipts relative to our March forecast by £16 billion in 2029-30, before accounting for Budget policies. In isolation, the reduction in productivity growth could have lowered revenues by around £16 billion in 2029-30. However, the boost to receipts from higher inflation and changes to the composition of nominal GDP growth, set out in the previous paragraph, more than offset this. As a result, income tax and NICs receipts are £11 billion higher than in March by 2029-30, due to higher nominal earnings growth coupled with frozen personal tax thresholds. In addition, VAT receipts are £4 billion higher than March in 2029-30 due to higher pre-measures consumption growth. And corporation tax receipts are little changed relative to our March forecast thanks, in part, to lower investment growth. n n1.13 The impact on public sector net borrowing of the higher pre-measures receipts forecast is more than offset by a £22 billion increase in the pre-measures spending forecast by 2029-30, relative to March. Before accounting for policy, higher forecast inflation and earnings and an increase in disability caseloads increase projected spending on welfare by £8 billion by 2029-30. Higher inflation and interest rates increase debt interest spending by £4 billion by 2029-30. The pre-measures forecast also includes a significant increase to local authority spending, which increases borrowing by £8 billion in 2029-30, reflecting substantial recent upward revisions to outturn and rapidly growing spending on special educational needs and disabilities (SEND). Departmental spending has also been revised up by an average of around £6 billion per year across the Spending Review period, before accounting for policy, to reflect risks and pressures, most notably on the NHS, asylum, and the cost of digital ID cards, for which no specific funding has been identified. n n1.14 Before accounting for Budget policies, these forecast changes left borrowing £17 billion higher this year and £6 billion higher in 2029-30. Higher spending pressures, in particular from local authorities and on welfare, drive the substantial deterioration in borrowing this year. This is then partly offset by higher forecast personal tax and VAT receipts from next year onwards due to stronger nominal earnings growth and inflation. The pre-measures deterioration in the current budget matches that of borrowing, leaving a current surplus of around £4 billion in 2029-30, which is £6 billion lower than the £10 billion surplus forecast at the Spring Statement. This change in borrowing since March is small compared to the £21 billion average absolute revision in the fourth year of our pre-measures forecast. n nChart 1.4: Pre-measures change in borrowing since March n nNote: This chart excludes the fiscally neutral reclassification of Scottish block grants and Scottish fire and police pensions. It also excludes the effects of changes in our pre-measures forecasts for most environmental levies, VAT refunds, depreciation, council tax, community infrastructure levy and the new extended producer responsibility. Each of these change both receipts and spending by equal amounts and therefore does not change borrowing. n nSource: ONS, OBR n n1.15 In the face of this comparatively modest medium-term deterioration in the pre-measures fiscal outlook, the direct effects of Budget policies increase borrowing by £6 billion next year but reduce it by £15 billion in 2029-30. n nPolicy measures reduce the current deficit by more than borrowing due to the estimated impact of policy on local government and other capital spending. n n1.16 Spending policies in this Budget increase borrowing in every year, by £7 billion next year and by £11 billion in 2029-30. They comprise: n nWelfare measures, with a combined cost of £9 billion in 2029-30. These include the reversals to previously announced cuts to winter fuel payments and health-related benefits (costing £7 billion in 2029-30), and the removal of the two-child limit within universal credit (costing £3 billion by 2029-30) which increases benefits for 560,000 families by an average of £5,310. n nOther spending measures, which increase borrowing by £2 billion in 2026-27 and £10 billion in 2027-28, but only £2 billion in 2029-30. These include temporarily part-funding the renewables obligation, which costs £3 billion next year and an average of £2 billion in 2027-28 and 2028-29, before the subsidy is removed in 2029-30; as well as changes to departmental spending which increase spending in the near term and leave it broadly unchanged over the forecast period as a whole. n n1.17 Tax increases raise £0.7 billion next year and £26 billion in 2029-30, more than offsetting the increase in spending by the final years of the forecast. They comprise: n nA set of personal tax rises with a combined yield of £15 billion in 2029-30. These include: freezing tax thresholds from 2028-29 onwards, which raises £8.0 billion in 2029-30 and contributes to around 780,000 more basic-rate, 920,000 more higher-rate, and 4,000 more additional-rate taxpayers by 2029-30 than in the March forecast; charging National Insurance on salary-sacrificed pension contributions, which raises £4.7 billion; and increasing tax rates on dividends, property and savings income by 2 percentage points, raising £2.1 billion. n nOther tax changes raise £11 billion by 2029-30. These include a new mileage-based charge on electric and plug-in hybrid cars from April 2028 at around half the fuel duty rate paid by drivers of petrol cars (raising £1.4 billion); a reduction to writing down allowances in corporation tax (£1.5 billion); reforms to gambling taxation (£1.1 billion); changes to capital gains tax reliefs on employee ownership trusts (£0.9 billion); and tax administration, compliance and debt collection measures (£2.3 billion). These tax rises are partially offset by a further freeze to fuel duty rates until September 2026, which costs £2.4 billion next year and £0.9 billion in the medium term. n n1.18 The indirect effects of Budget policy measures on the economy are estimated to lower borrowing by £2 billion in 2026-27 largely thanks to impact of lower inflation on debt interest spending. From 2027-28 onwards, the indirect effects of policy add to borrowing by amounts rising to £5 billion in 2029-30. This is mainly due to higher debt interest spending from additional borrowing in the early years of the forecast, and from lower receipts, as the personal tax rises reduce consumption and lower inflation reduces nominal earnings. In addition, we have judged that the Government’s decision to assume the full cost of SEND within central government will lead to higher departmental spending in 2028-29 and lower local authority spending in subsequent years. n nChart 1.5: Public sector net borrowing: changes since March n nSource: ONS, OBR n n1.19 Incorporating both pre-measures changes and the impacts of policy, National Accounts taxes as a share of GDP are forecast to increase from 35 per cent in 2024-25 to an all-time high of just over 38 per cent from 2029-30 onward. This would be 5 percentage points above their pre-pandemic level. Around two-thirds of this increase in the tax take since 2019-20 comes from rising personal taxes – primarily due to previously announced threshold freezes and employer NICs increases, and the personal tax rise package in this Budget. The forecast for the tax take in 2029-30 is 1 per cent of GDP higher than in our March forecast, with two-fifths of this increase coming from our pre-measures forecast revisions and three-fifths from the tax measures in this Budget. n n1.20 Spending as a share of GDP is forecast to rise from 44 per cent in 2024-25 to 45 per cent in 2025-26 and then fall back to 44 per cent of GDP by 2030-31. This would also be 5 percentage points above its pre-pandemic level. The projected fall in spending over the forecast period mainly comes from slower growth in departmental resource spending, which falls by 0.5 per cent of GDP; reductions in spending on a number of time-limited items, such as the Infected Blood and Post Office compensation schemes; and a rising surplus on unfunded public service pension schemes. These declines more than offset a forecast rise in welfare spending (of 0.3 percentage points) and debt interest (of 0.1 percentage points). n nChart 1.6: National Accounts taxes and spending as a share of GDP n nNote: Throughout this chapter and this EFO, unless otherwise stated, March 2025 forecast numbers as a per cent of GDP have been rebased to remove the impact of 2025 Blue Book levels revisions. n nSource: ONS, OBR n n1.21 Borrowing as a share of GDP is projected to fall from 5.1 per cent last year, to 4.5 per cent this year, and then decline to 1.9 per cent of GDP in 2030-31. Compared to March, it is estimated to be higher by £12 billion (0.4 per cent of GDP) in 2024-25 and £21 billion (0.7 per cent of GDP) higher in 2025-26, but still lower by £6 billion (0.2 per cent of GDP) in 2029-30. In-year forecast revisions and policy changes mean that borrowing this year is forecast to be around 5 per cent of GDP for the fifth year since the pandemic. And the profile of the planned medium-term reduction in borrowing has largely been shifted back a year relative to March with more of the weight of consolidation coming in 2028-29 and 2029-30. Around three-quarters of the planned reduction in borrowing over the next five years now comes from tax increases, compared with two-thirds in Autumn Budget 2024. n nChart 1.7: Public sector net borrowing n nNote: Throughout this chapter and this EFO, unless otherwise stated, March 2025 forecast numbers as a per cent of GDP have been rebased to remove the impact of 2025 Blue Book levels revisions. n nSource: ONS, OBR n n1.22 Public sector net debt (PSND) is forecast to rise from 95.0 per cent of GDP this year to a peak of 97.0 per cent of GDP in 2028-29. It declines slightly to 96.1 per cent of GDP in 2030-31 mainly due to a one-off Bank of England repayment. Compared to the restated March forecast, PSND is 1.5 per cent of GDP higher on average over the forecast, mainly due to higher borrowing in the near term. Underlying debt, excluding the Bank of England, follows a similar trend to forecasts over the past few years, with higher near-term borrowing meaning debt is initially forecast to rise and it then stabilises later but at a higher level than previously forecast. n nChart 1.8: Public sector net debt n nNote: Throughout this chapter and this EFO, unless otherwise stated, March 2025 forecast numbers as a per cent of GDP have been rebased to remove the impact of