Trend setters
Think tank: Resolution Foundation
Author(s): Elliott Christensen; Gregory Thwaites
October 14, 2025
This report from UK think tank the Resolution Foundation discusses the OBR’s forecast for trend productivity growth and why it matters so much for the Budget.
The Budget in November is likely to reveal a significant deterioration in the outlook for the public finances, requiring the Government to raise taxes in response. A key reason for this is what the Office for Budget Responsibility will assume about how fast the economy can sustainably grow. It has been eight years since this judgement was significantly changed. Having waited a long time to revisit this key assumption, the most recent data, if anything, suggest there has been some good news on productivity growth.
In this Spotlight, we unpack what this judgement means for the fiscal forecast, arguing that a growth downgrade is overdue, based on long-standing trends, rather than any news since March. Any such downgrade is likely to have a smaller impact on the fiscal rules than widely thought, due to the shortening in the fiscal rules assessment horizon (from five to four years) at the Budget.
Looking ahead, the OBR should revisit this assumption more regularly, in a more transparent and predictable way.
