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Reeves Could Face £20bn Budget Hole As UK Productivity Downgraded. The government is bracing for a major shortfall in public finances ahead of next month’s Budget with Chancellor Rachel Reeves potentially facing a £20bn gap due to weaker-than-expected productivity growth. According to reports, the Office for Budget Responsibility (OBR) has downgraded the UK’s productivity forecast by 0.3 percentage points, a small shift that could have a big impact. Economists at the Institute for Fiscal Studies estimate the change could add more than £21bn to government borrowing by 2029. Reeves has confirmed both tax rises and spending cuts are on the table, though she’s sticking to her two key fiscal rules not borrowing for day-to-day spending and ensuring debt falls as a share of national income. The downgrade highlights the UK’s long-running productivity problem, which Reeves acknowledged has been “very poor since the financial crisis and Brexit.” The final OBR forecast will be published alongside the Budget on 26 November.
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