Fiscal Risks and Sustainability Report 2026

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 fiscal risks and sustainability report 2026, which was 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, 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 2011 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 have taken the necessary decisions to put the public finances on a sustainable path while continuing to support economic growth. The Government are 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 strengthen credibility and transparency.

The Government have 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 have also published the defence investment plan, backed by £298 billion of investment over the next four years, to strengthen national security, support long-term resilience and invest in the capabilities needed for the future.

The FRS highlights the importance of productivity growth to fiscal sustainability. Tackling historical under-investment is critical to boosting productivity, and the Government are protecting the increase of more than £120 billion 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.