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If you’ve seen headlines lately about the UK economy looking a little shaky, you’re not alone in wondering what it all means – especially when it comes to your own finances. The Office for Budget Responsibility (OBR), the UK’s independent economic watchdog, has raised some red flags in its latest report, and while it sounds serious, the good news is: you’re not powerless in how you respond.
So, what’s going on?
Each year, the OBR takes a big-picture look at the UK’s finances. This year’s Fiscal Risks and Sustainability report highlights some growing concerns – mainly around public debt and long-term Government promises like pensions and public spending.
A few key points:
- The UK has a higher budget deficit (meaning it’s spending more than it earns) than other similar countries.
- National debt has risen steadily over the past 15 years and is now at its highest level since the 1960s.
- One particular area of concern is the rising cost of the state pension, which is costing far more than originally forecast.
The Chair of the OBR, Richard Hughes, even warned that without some changes, debt could grow significantly in the coming decades.
What might happen next?
Let’s be honest, this isn’t the easiest news to hear. But what does it actually mean for everyday people like you and me?
Well, to keep the UK’s finances on track, it’s likely the Government will need to bring in more money, and tax rises are looking like the most probable route. While the new Labour government has promised not to increase income tax, VAT, or employee National Insurance, there are other ways they could raise revenue, such as freezing tax thresholds or looking at other forms of taxation.
Here’s the most important part: Don’t panic
It’s completely normal to feel a little uncertain when you hear about economic risks or potential tax changes. But this isn’t a moment for knee-jerk reactions or worry. Instead, think of it as a good opportunity to review your finances with care and intention.
Before making any changes to your savings, investments, or pension plans, take a breath and get some expert advice. The economy will shift and change, but your long-term financial goals are still within reach.
Speaking to a financial planner can help you:
- Understand how these changes might (or might not) affect you
- Stay confident in your investment or savings strategies
- Make informed decisions that support your lifestyle, values, and goals
You’ve got this
Managing your money in uncertain times doesn’t mean making decisions in fear. With a calm, thoughtful approach and the right support, you can navigate whatever comes next with clarity and confidence. Get in touch with us today to see how we can help.