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: 07.11.2026 Expectation: 6750 pips
Selling USDCAD down to 1.35500
Yesterday at 09:05 AM 21
Period: 07.11.2026 Expectation: 3700 pips
Go long on natural gas with $3.37 target
Yesterday at 06:22 AM 15
Gold sell
Period: 14.10.2026 Expectation: 2100 pips
Go short on gold with $4,100 in view
Yesterday at 06:07 AM 16
Period: 06.11.2026 Expectation: 1650 pips
Invest in Brent crude up to $115
06 October 2026 36
Period: 20.10.2026 Expectation: 4500 pips
Buy Bitcoin with $90,000 in sight
06 October 2026 25
Period: 31.12.2026 Expectation: 900 pips
AUDCAD upside may come into play in medium term
06 October 2026 55
Go to forecasts