British are confronted with four years of flatlining wealth – and a new tax burden – as a grim report underlined how even meager economic growth has been driven by immigration.
In its last prospects, the Office for Budget Responsibility (OBR) said that it does not expect that the real GDP will return per person to 2022 levels – before the energy crisis strikes – until 2026.
That is about a year later than the watchdog of the Treasury that was expected at the time of the October budget.
In the meantime, the OBR emphasized the role of net migration – which in recent years has reached a new record of 906,000 in the growth of the economy.
It pointed out that official figures have done that Review the size of the British workforce last year by 1.5 percent – half a million people.
However, the real GDP did not get much ground in the year, with economic output per hour worked. As a result, GDP per person was lower.
In its last prospects, the Office for Budget Responsibility (OBR) said that it does not expect that the real GDP will return to 2022 levels per person before the energy crisis struck, until 2026.
The OBR emphasized the role of net migration – which has hit a new record annually from 906,000 in recent years – in the growth of the economy
The report said that the structural weakness in productivity was the fault for about a third of the one percentage of downgrade in prediction growth this year
Rachel Reeves today delivered her spring statement to the commons
The adult population will expand over the next five years with a further 2.1 million people, re -powered by net inflow.
The OBR assumes that the annual net migration will 'fall sharply' from 728,000 in the year to mid-2014 to a 'trough' of 258,000 in the year to mid-2017. It is expected that it will be 340,000 in 2029-30.
The OBR said: “Based on these newest on -population projects, we now assume that the adult population will grow by 2.1 million people in the next five years to reach 57.8 million in 2029.
'The annual growth of the population of adults is on average 0.8 percent during the prediction period, in accordance with the October's prediction.
'In 2029, the adult population will be half a million higher than in the forecast of October, which reflect the higher starting level almost completely.
'It has also revised the level of real GDP by 0.8 percent in mid -2024.
'But the real GDP growth stagnated largely in the second half of 2024 instead of continuing to grow, as we had expected in the October's prediction, which means that the output level was broadly in line with our earlier expectations against the end of 2024.
“The net effect of these developments was that the measured level of productivity (output per hour) at the end of 2024 was 1.3 percent lower than in October's prediction.”
The report said that the structural weakness in productivity was the fault of about a third of the one percentage point -down grade in prediction growth this year.
It said that for a broader GDP 'the permanent hit for productivity is partially compensated by stronger personnel growth'.
The OBR warned that the latest upgrades to net migration are still not incorporated into the Ons Work figures – which means that more revisions will probably be next year.
The benchmark for GDP per person fell through 0.9 percent in 2023 and with another 0.1 percent in 2024.
The OBR said it It is expected that this year will grow by 0.3 percent. But that is much lower than the total GDP growth of 1 percent.
The watchdog estimated that the real GDP per person will not register its 2022 pre-energy crisis level until the beginning of next year.
“This is about a year later than we predict in October, which reflects weaker productivity growth in the short term,” the body said.
Although there were no significant tax changes in the spring statement, the OBR said that the level was set for a record high.
The OBR has sharply relegated the growth reasons for this year
“Tax if a share of GDP is expected to rise from 35.3 percent this year to a historic high point of 37.7 percent in 2027-28 and remains at a high level for the rest of the prediction,” the report said.
'The sharp increase in forecast in 2025-26 is largely due to the budget increase of autumn 2024 in NIC's of employers, who will come into force in April 2025, and an expected recovery of the receipts of capital tax.
'The further rise in prediction of the tax on 2027-28 is mainly due to the growth of nominal income in combination with frozen tax thresholds, further increases in capital tax and a boost for receipts of the temporary repatriation facility (TRF) that was announced in the reform of the Hervormications.
“The tax recording is then predicted that it will be aware of personal barriers, the TRF window closes and the absorption of electric vehicles reduces the reception of fuel obligation.”
