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chancellor Rachel Reeves will deliver it Budget It could peak on Wednesday against a backdrop of rising unemployment and higher-than-forecast government borrowing, but amid signs inflation may pick up this year.
Here, the PA news agency looks at five key economic indicators that are likely to shape both the content and tone of Ms Reeves’s speech.
– to borrow
Government borrowing for the current fiscal year is running higher than anticipated and is the highest on record barring the COVID-19 pandemic.
Borrowing for the seven months from April to October 2025 stood at £116.8 billion, according to figures published last week. National Statistics Office (ONS).
This is £9.9 billion more than the £106.9 billion forecast for the period Office for Budget Responsibility (OBR) in March.
This is the second-highest borrowing figure for April-October, behind only 2020, since comparable data began in 1993.
According to the Institute for Fiscal Studies think tank, the government has beaten forecasts this year due to “a combination of lower-than-expected tax receipts and higher-than-expected borrowing by councils and other bodies outside the control of central government”.
This means that when the OBR publishes its new economic forecasts alongside the Budget on Wednesday, total borrowing for the current financial year is likely to be revised downwards, as may be for subsequent years.
It is not unusual for a government to borrow to spend more than it collects from taxes and other income.
The last time the government spent less than it received was 25 years ago in 2000/01.
However, borrowing is now running at comparatively high levels and the latest data is a reminder of how economic forecasts can be subject to too much uncertainty.
Should borrowing continue to exceed expectations, Rachel Reeves may need to find additional ways to ensure that there is enough “headroom” in her budget to balance the country’s finances.
– economic development
The OBR’s new forecasts on Wednesday are also likely to include revised estimates of economic growth in the UK.
Growth has slowed to 2025 as the years have passed.
According to ONS estimates, the size of the economy grew 0.7% in January–March, 0.3% in April–June and just 0.1% in July–September.
Additionally, the economy is projected to contract 0.1% in September due to a decline in motor manufacturing partly caused by the cyberattack on Jaguar Land Rover.
The OBR’s current forecast for growth throughout 2025 – published in March – is 1.0%, rising to 1.9% in 2026.
The UK has recorded annual growth of less than 1% only five times in the last 30 years: in 2008 and 2009 (zero and -4.6% respectively during the financial recession); 2011 (0.9%), 2020 (-10.0%, during pandemic) and 2023 (0.3%).
The Chancellor already knows the new GDP forecast for 2025 and this will undoubtedly shape some of the tone of his budget speech.
Responding to July-September GDP figures earlier this month, Ms Reeves said: “We had the fastest growing economy in the G7 in the first half of the year, but there is more to do to create an economy that works for working people.
“In my Budget later this month, I will make fair decisions to build a stronger economy that will help us continue to cut waiting lists, cut the national debt and cut the cost of living.”
– inflation
Britain’s overall inflation rate stood at 3.6% last month, down from 3.8% in September, but above the Bank of England’s target of 2%.
It was the first time the rate has declined month-on-month since May, suggesting inflation may have peaked this year.
This figure – based on the ONS Consumer Price Index – is a measure of how much prices have risen on average year on year.
The decline from 3.8% to 3.6% means prices are not rising as fast as they were.
Any evidence that the cost of living is falling is good news for the Government and the latest figures will almost certainly be welcomed by Ms Reeves during her speech.
It could also mean that the Bank of England could cut interest rates from the current level of 4% when it makes its next decision in December.
The Bank of England’s own forecasts show inflation is on track to fall to its 2% target by 2027.
This would mark a return to relatively low inflation in the UK and the end of some tumultuous years, which saw the rate reach 11.1% in autumn 2022.
– Unemployment
Estimates of unemployment in the UK are produced by the ONS but are not currently classified as official statistics.
This is because the figures are based on a survey which has had a low response rate since the pandemic, meaning the data is unreliable and should be treated with caution.
The trend suggested by the latest data is that unemployment has increased over the past year, from 4.3% of people aged 16 and over in July–September 2024 to 5.0% in July–September 2025.
This is the highest rate outside the COVID-19 pandemic since 2016.
The OBR’s current forecast for the unemployment rate in 2025 is 4.5% and, given the ONS data, it looks like this figure will be revised down on Wednesday.
Rising unemployment is not the backdrop any Chancellor would choose for a budget speech, especially given the confusion over how many people may or may not be out of work.
The unreliability of unemployment data has been criticized by many economists and statisticians, including Bank of England Governor Andrew Bailey.
Ms Reeves also faces other signs pointing to a weak jobs market, with the number of people on employee payrolls falling over the past 12 months, as well as a slowdown in wage growth.
However, the proportion of the workforce classified as economically inactive – those who are of working age and not in employment but not currently looking for work – has fallen slightly.
It was estimated at 21.0% in July-September 2025, compared to 21.6% in the same period a year ago.
– retail sales
Finally, the Chancellor will surely have paid attention to the latest retail sales figures.
According to the ONS, sales volumes fell 1.1% in October, the first monthly decline since May.
It follows strong growth of 0.7% in September, but the decline was bigger than economists expected and could signal consumers being cautious with their money ahead of the Budget.
There was some feedback from retailers that people were looking forward to November’s Black Friday deals, the ONS said.
Rob Wood, chief UK economist at Pantheon Macroeconomics, said: “We expect retail sales volume growth to remain slow in November as pre-Budget speculation has peaked.
“We still think consumers should return to the high street once the Budget is passed and there is a little more clarity on fiscal policy.”
There should be some clarity on Wednesday, when the Chancellor rises to her feet in the House of Commons to deliver one of the most eagerly awaited budgets in recent years.