Chancellor Rachel Reeves on Wednesday (26 March) told parliament “real household disposable income will be almost twice that forecast” in the October Budget, which could go towards spending on non-essentials, like travel.
She added the independent Office for Budget Responsibility (OBR) had concluded "people will on average be over £500 a year better off." "That will mean more money in the pockets of working people," said the chancellor.
Reeves also said increasing the National Minimum Wage, another measure announced in October, gave “three million people a pay rise from next week”.
She reiterated her promise of no further tax rises set out in October, but pledged to recoup an extra £1 billion a year from tax dodgers by increasing HMRC resources. Reeves said £7.5 billion could be recouped in total this year.
The government also highlighted the fall in inflation, which dropped from 3% to 2.8% last month. Reeves said it would average 3.2% this year, falling to an average 2% in 2027.
However, the OBR said growth in the economy this year would be only 1%, half its previous forecast.
Julia Lo Bue-Said, Advantage Travel Partnership chief executive officer, said:
"I’m concerned that news of the UK’s economic forecast being halved for 2025 could potentially trigger discussions about a downturn, which would impact consumer confidence.
"The last thing our industry sector needs right now is talk of a recession - particularly in the short term - as businesses already face imminent cost increases and household finances continue to come under additional pressure.”
In contrast, the OBR upgraded forecasts for the coming years, predicting GDP growth of 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029. Reeves said these forecasts were ahead of those back in October and good news for consumers.
She added she was “backing the builders, not the blockers”, by supporting a third runway at Heathrow.
