“The public finances are finally showing signs of improvement in recent months,” said Ruth Gregory, economist at the consultancy Capital Economics. However, she warned that the pace of deficit reduction remained “very slow” and the political vulnerability of Reeves and Prime Minister Sir Keir Starmer “casts doubt over whether the fiscal tightening planned in future years will be achieved”.
Gregory argued that to meet the OBR’s 2025-26 forecast, borrowing needed to be £13.5bn lower in the remaining three months of this fiscal year than it was last year.