27 March 2025 | Other

US tariffs and rising bond yields derail Britain's plans to reduce its budget deficit: OBR

US tariffs and rising bond yields derail Britain's plans to reduce its budget deficit: OBR

UK Finance Minister Rachel Reeves announced a decision to cut spending on social security and several other needs as part of her plans to reduce the country's record budget deficit.

However, experts at the independent Office for Budget Responsibility (OBR) warn that the finance minister's intentions are at risk of being derailed.

The organization believes that global trade tensions and US tariffs may reduce the UK economic growth by 1% this year. At the same time, interest rate hikes by the Bank of England and an expected rise in bond yields could wipe out the small reserve included in the plans to achieve the fiscal target.

The OBR sees the British government's potential borrowing to reach 47.6 billion pounds ($61.4 billion) through the end of the decade. This is well above the government's estimate announced in the forecast released in autumn.

As Reuters reports, the budget revision and tariff threats have revived calls for Britain's government to take more drastic measures to tackle its budget deficit and debt, which accounts for more than 95% of the country's GDP.

Elena Dorokhina MarketCheese
Period: 30.01.2026 Expectation: 600 pips
AUDCAD trend holds firm on upbeat Australian reports
23 January 2026 43
Lyra_Moonwell1
Lyra_Moonwell1

Listed among the best MarketCheese authors
1st in the segment "Oil and gas"
Brent sell
Period: 30.01.2026 Expectation: 100 pips
Brent's rally stalls as upside is limited by $65–$66 resistance
23 January 2026 50
Period: 28.02.2026 Expectation: 3000 pips
Buying EURUSD on weak US GDP print
23 January 2026 33
Period: 30.01.2026 Expectation: 1110 pips
GBPUSD’s rally is capped despite eased geopolitical stress
23 January 2026 22
Period: 29.01.2026 Expectation: 690 pips
NG selloff targets $4.400 ahead of reaching local high
22 January 2026 56
Lyra_Moonwell1
Lyra_Moonwell1

Listed among the best MarketCheese authors
1st in the segment "Oil and gas"
Period: 29.01.2026 Expectation: 15200 pips
Investing in ETHUSD up to $3,170 on US-EU trade relief
22 January 2026 62
Go to forecasts