OBR to publish updated economic and fiscal forecasts

The Office for Budget Responsibility was expected to set out updated economic and fiscal forecasts on 26 March 2025, in a statement that discussion ahead of it had focused on "whether the Chancellor will meet her fiscal rule" and the extent to which cuts to disability benefits would be used to balance the government's books¹. The Joseph Rowntree Foundation, in a briefing published on 22 March 2025, said it was thought the Chancellor was on course to miss her fiscal rules on 26 March by £5 billion¹.

The JRF briefing models household incomes using the Institute for Public Policy Research tax-benefit microsimulation model, drawing on Family Resources Survey data, Office for National Statistics outturns and projections from a range of forecasters¹. It estimates that average household disposable incomes after housing costs will remain £400 a year below 2020 levels in April 2025, and that by April 2030 households will be a further £1,400 worse off on average than they are today, a 3 percentage point fall¹. It puts the aggregate decline in disposable incomes at around £40 billion a year by April 2030, a figure that does not include the impact of £5 billion in cuts to disability and incapacity benefits in 2029/30¹.

The briefing sets out how it expects the fall to be distributed. It says the lowest income families will be £900 worse off by 2030 compared with today, while middle and higher income households see a fall in real disposable incomes of around 3% between 2025 and 2030¹. Families with no work are forecast to see a further reduction of 4% of their disposable incomes, while families with some work see their disposable incomes fall by 3% between 2025 and 2030¹. Single parent families are forecast to have £1,100 less in disposable income in 2030 compared with 2025¹. The only family types set to be better off in April 2025 compared with 2019 are pensioner couples and working-age couples without children¹.

On housing and earnings, the briefing forecasts the average mortgage holder paying around £1,400 more per year in mortgage interest by 2030 compared with 2025, and the average renter paying around £300 more across the same period¹. It says real gross earning growth is forecast to reverse from 2025, with earnings falling £700 a year between 2025 and 2030, and that fiscal drag continues to squeeze post-tax income through to 2028, when income tax thresholds are currently set to rise for the first time since 2021¹.

The briefing also notes that 2 in 5 working age families receiving disability benefits are already unable to afford enough food, heat their home or are behind on bills¹. It says the growth mission was refreshed to include a new target of "higher living standards in every region of the country", as measured by the OBR's estimate of real household disposable incomes per head¹.

Why it matters for households

The forecasts cover the period from the 26 March 2025 statement through to 2030. On the JRF modelling, the fall in average disposable incomes is concentrated in the years after 2025, with the past year possibly proving the high point for living standards this parliament¹. Households with mortgages and renters are both affected through housing costs, which the briefing expects to rise faster than inflation¹. Working households are affected through earnings growth reversing from 2025 and through frozen income tax thresholds until 2028¹. Households on the lowest incomes, families with no work and single parent families are forecast to see larger proportionate falls than middle and higher income households¹. The £5 billion in disability and incapacity benefit cuts in 2029/30 is not included in the £40 billion aggregate decline figure¹.

What happens next

The OBR statement was due on 26 March 2025¹. The JRF briefing was published on 22 March 2025 and is the latest from its new economics programme, launched in March 2024¹. The briefing's modelling assumes the OBR adjusts its forecasts in a similar way to how the Bank of England and other major forecasters adjusted theirs up to February 2025¹. The briefing says the OBR will not be able to report on distributional impacts of its real household disposable incomes per head measure¹. Further detail on the government's regulation and policy approach to the fiscal rules has not been reported in these sources.