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: 30.06.2026 Expectation: 3300 pips
Buying USDCAD up to 1.41500
Today at 11:21 AM 18
Period: 17.04.2026 Expectation: 700 pips
AUDCAD is at risk of correction amid fragile Middle East truce
Today at 10:34 AM 14
Gold buy
Period: 30.04.2026 Expectation: 800 pips
Invest in gold once $4,800 gives way
Today at 09:23 AM 35
Brent sell
Period: 17.04.2026 Expectation: 630 pips
Brent crude sell-off targets $92.5
Today at 08:44 AM 20
Period: 17.04.2026 Expectation: 920 pips
Friday profit-taking puts GBPUSD buyers on sidelines
Today at 06:52 AM 17
Period: 30.06.2026 Expectation: 3000 pips
Buying USDJPY up to 162.00
Yesterday at 11:39 AM 54
Go to forecasts