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.