Chancellor of the Exchequer (): Since I became Chancellor,
the UK economy has grown by 2.1% - the fastest growth among
European G7 economies in that period, demonstrating that this
government's economic plan is the right one. Growth is the only
way to deliver sustainable rises in living standards, and, after
falling by 2.3% in the previous parliament, living standards
(Real Household Disposable Income per capita) have grown by 1.1%
so far this Parliament. We have increased our resilience to
global shocks by building stronger public finances and bringing
down borrowing - which is less than the G7 average this year -
while bringing in an additional £120 billion in public investment
through changes to our fiscal rules.
The Office for Budget Responsibility's (OBR) Fiscal Risks and
Sustainability Report (FRS) 2026, laid today, confirms the need
to boost growth and maintain sustainable public finances. This
demonstrates the importance of this government's decisions to
reduce the deficit, unlock a step-change in public investment,
and strengthen the tax base by announcing Electric Vehicle Excise
Duty (eVED), in order to support a stronger fiscal position.
The FRS is an important part of the government's fiscal risk
management framework. The report fulfils the OBR's duty under the
Budget Responsibility and National Audit Act to assess and report
on the sustainability of the public finances and the key risks
facing them.
This year's FRS provides a detailed assessment of the risks to
long-term fiscal sustainability. Since the start of this
Parliament, the government has taken the necessary decisions to
put the public finances on a sustainable path while continuing to
support economic growth. The government is bringing down
borrowing - borrowing in 2025-26 was over £23 billion lower than
in 2024-25, and the OBR forecast it will continue falling in
every year. This strategy is underpinned by robust fiscal rules,
which were designed to unlock a step-change in public investment
while keeping debt on a sustainable path, alongside multi-year
spending plans and wider reforms to the fiscal framework that
strengthened credibility and transparency.
The government has taken the decisions needed for long-term
security and sustainability. For example, at Budget 2025, the
government strengthened the tax base by introducing eVED to
respond to the long-term decline in fuel duty receipts. The
government has also published the Defence Investment Plan, backed
by £298 billion of investment over the next four years, to
strengthen national security, support longterm resilience and
invest in the capabilities needed for the future.
The FRS highlights the importance of productivity growth to
fiscal sustainability. Tackling historic under-investment is
critical to boosting productivity, and the government is
protecting the over £120 billion increase in departmental capital
spending over the Parliament. Decisions taken across this
Parliament will raise output in the medium and longer term, as
the OBR estimates that the combined supply-side effects of policy
announced across the Parliament will raise the level of GDP by
over 0.6% after 10 years.
Fiscal risks and sustainability
report July 2026
