OBR accidentally publishes full Budget before Reeves speech
The government will freeze income tax thresholds, implement a mansion tax and freeze fuel duty according to an unprecedented leak from the government’s fiscal watchdog that revealed its full scorecard for the Budget update before the Chancellor delivered her speech.
The Office for Budget Responsibility released its full report on the government’s fiscal plans for the rest of the parliament, including officials of evaluation every policy set to be announced at the Budget.
The plans reveal the Chancellor will raise the annual tax take by £26bn in order to successfully stay with her fiscal rules, with headline revenue raisers including a freeze of income tax thresholds, a rise in gambling duties and applying National Insurance contributions on salary sacrificed pensions all included in the Budget. The historic consolidation has left the Chancellor with an overall fiscal headroom of £22bn, the report said, and taking the total tax burden to 28 per cent of GDP.
Government borrowing costs fell immediately after news of the leak emerged, before climbling sharply by four basis points higher than the start of trading.
Several bond investors had voiced concern over the extent to which the Chancellor would look to ‘backdate’ much of the fiscal consolidation to later in the parliament. The OBR leak confirmed concerns, with policies like gambling duty, a new mileage-based tax on EVs and a tax hike on dividends.
Nuwan Goonetilleke, head of capital markets at pensions giant Phoenix, said: “With the OBR unexpectedly publishing its growth forecast early, we see a smaller than expected near-term deterioration in the fiscal numbers, but a more backloaded consolidation.
“Initial reactions from markets shows the curve steepening, with 30y yields up 4bp on the day”
Sterling also dropped 0.4 per cent on the dollar after the pre-Budget leak.
The OBR apologised for the error in a statement, saying: “A link to our economic and fiscal outlook document went live on our website too early this morning. It has been removed.
“We apologise for this technical error and have initiated an investigation into how this happened.
“We will be reporting to our Oversight Board, the Treasury, and the Commons Treasury Committee on how this happened, and we will make sure this does not happen again.”
Headline measures included in the Budget are:
- Income tax thresholds frozen until 2030 – £7bn
- Gambling duties hiked on betting companies – £1.1bn
- A new mileage-based tax on battery-powered and hybrid cars – £1.4bn
- A mansion tax on properties worth over £2m – £0.4bn
- A freeze to fuel duty – £2.4bn
- Applying National Insurance contributions on salary sarifice schemes – £3.5bn
This is a breaking news story and will continue to be updated.