If you’re a normal, sane business owner, your reaction to the latest OBR report is usually:
“That’s for economists and politicians. I’ll just wait to see what actually happens.”
Totally understandable.
The document is long. The language is dry. And on the surface it feels miles away from your world of staff, invoices, and HMRC payments.
But here’s the thing:
The assumptions tucked away in that report are the backdrop for your next few years of trading.
- How fast the economy grows
- Where wages and inflation are heading
- How long interest rates stay higher
- What direction taxes are moving in
All of that gets baked into the decisions government makes – and into the environment your business has to live in.
So instead of ignoring it completely, I’d much rather you use it as what it actually is:
A free, detailed “likely weather forecast” for your business.
Let’s talk about how to use the OBR like a stakeholder – not just a taxpayer with a front-row seat to the bill.
First things first: what is the OBR and why should you care?
Quick version, without the jargon:
- The Office for Budget Responsibility (OBR) is an independent body that produces forecasts for the UK economy and public finances.
- When the Chancellor stands up on Budget day and says “based on the latest forecasts…”, they’re talking about OBR numbers.
- It’s not always right (no forecast is), but it sets the tone for policy and spending.
You should care because those forecasts influence:
- What happens to taxes
- How much pressure there is on public spending
- The underlying assumptions around growth, wages, inflation and interest rates
You don’t need to read the whole thing.
You just need to know which parts actually matter for an owner-managed business – and how to plug them into your planning.
The mindset shift: from “observer” to “stakeholder”
Most people see themselves as:
- Taxpayers
- Voters
- Slightly annoyed spectators
But if you’re running a business doing, say, £500k–£2m turnover, you are also:
- An employer
- An investor (in your own business)
- A major contributor to HMRC’s revenue
You’re not just paying for the system. You’re operating inside it, with a lot at stake.
So the question shifts from:
“What are they doing with my tax money this year?”
to:
“Given the world they’re describing, how do I set my business up to win?”
And that’s where the OBR becomes useful.
The 7 numbers from the OBR you actually need
You don’t need to memorise every chart. You just need to keep an eye on a handful of key assumptions.
Here are the seven I’d want on the table in any planning session.
1. GDP growth (how fast the economy is growing)
Why it matters:
- It’s the basic “speed” of the UK economy.
- If GDP growth is low, there’s less “easy” demand floating around.
What to do with it:
- If growth is sluggish, assume you’ll have to take market share, not just “grow with the market”.
- Build conservative sales forecasts and focus harder on retention and upsell.
2. Productivity growth (output per hour worked)
Why it matters:
- If productivity is flat and wages are rising, your margins will be squeezed.
- The OBR often revises productivity down, which is code for “we’re expecting more effort for the same output”.
What to do with it:
- Treat productivity as a board-level topic: systems, process, automation, training.
- Don’t just throw more people at problems – fix the way work flows through the business.
3. Inflation and wage growth
Why it matters:
- These drive your cost base – especially salaries and supplier prices.
- If the OBR sees inflation and wages staying higher for longer, your costs will too.
What to do with it:
- Build wage increases into your forecasts instead of pretending you can avoid them.
- Update your pricing strategy – if your costs are rising and your prices aren’t, you already know the ending.
4. Interest rates and the cost of borrowing
Why it matters:
- This shapes what it costs you to borrow, refinance or invest.
- If the OBR assumes rates stay higher than the last decade, cheap money is gone.
What to do with it:
- Stress-test your loans and overdrafts at higher rates.
- Be more selective with capital investment – every new asset or fit-out needs a clear ROI case now.
5. Tax-to-GDP ratio (overall tax burden)
Why it matters:
- This shows how much of the country’s income the government is taking in tax.
- When it’s at or near record highs, there’s very little room for big tax cuts.
What to do with it:
- Assume the system will stay tax-heavy and more reliant on stealth moves (frozen thresholds, allowance tweaks).
- Treat tax planning as a growth lever, not an afterthought.
6. HMRC compliance and “tax gap” assumptions
Why it matters:
- The OBR makes assumptions about how much tax HMRC will claw back through compliance activity.
- If those numbers are rising, HMRC is under pressure to step up enforcement, especially on small businesses.
What to do with it:
- Upgrade your compliance hygiene – VAT, PAYE, CIS, bookkeeping, director’s loan accounts.
- Assume queries and nudges are more likely, not less.
7. Public spending pressures (especially local government and services)
Why it matters:
- Tight public finances affect local services, business rates, infrastructure, and support schemes.
- If local authorities are under strain, you’ll feel it in business rates and declining services.
What to do with it:
- Factor rising local costs and thinning services into your planning.
- Be pickier about where you base or expand your business
How to turn the OBR from theory into a practical business tool
Knowing the numbers is Step 1.
The real value comes when you overlay them onto your own figures.
Here’s the simple three-step process I use with clients.
Step 1: Run an “OBR scenario” on your business
Take the key assumptions and translate them into your world:
- GDP growth ↠ modest sales growth, not a boom
- Wage/inflation assumptions ↠ planned salary increases and supplier rises
- Interest rate assumptions ↠ realistic borrowing costs
- Tax burden ↠ expectation of higher effective tax rates over time
Then build a basic three-year forecast that asks:
“If the OBR is broadly right, what happens to our turnover, profit and cash?”
You’ll often see:
- Profits squeezed
- Tax bills climbing faster than expected
- Cash being tighter than your gut feeling suggests
That’s exactly the point – it surfaces problems on paper before you live them for real.
Step 2: Make 3–5 concrete decisions off the back of it
The purpose of this exercise isn’t to be depressed.
It’s to make better decisions.
Once you’ve seen how the OBR world plays out in your numbers, you can ask:
- Do we need to review our pricing more aggressively?
- Do we need to trim or reshape our overheads?
- Are we comfortable with this level of borrowing if rates stay higher?
- Does our remuneration and tax planning still make sense in a high-tax world?
- Should we be investing in productivity (systems, automation, process) sooner?
Pick 3–5 actions with clear owners and deadlines.
Without that, the forecast is just a nice spreadsheet. With it, you’ve just upgraded your strategy.
Step 3: Repeat annually as part of your planning cycle
The OBR updates its forecasts regularly.
Most businesses don’t update their assumptions at all.
If you simply:
- Revisit your assumptions once a year,
- Update your forecast with the latest OBR direction, and
- Adjust your 3–5 key actions…
…you’ll be miles ahead of the average owner who’s making decisions based on:
“Feels like things are a bit tougher this year.”
You don’t have to treat the OBR as gospel. It’s just a useful, structured starting point.
Why working through this with your accountant matters
Could you do this on your own with a cup of coffee and a spreadsheet?
In theory, yes.
In practice:
- Most owners are too busy.
- It’s hard to be objective about your own business.
- You might not know how to translate OBR numbers cleanly into your forecasts.
This is exactly the sort of thing a good accountant should be helping with:
- They understand the OBR assumptions.
- They know how to model them into your numbers.
- They can sanity-check your conclusions and suggest practical options.
You don’t need more generic “economic commentary”.
You need a calm, factual conversation about:
“Given this backdrop, what do we do next?”
This isn’t about predicting the future – it’s about avoiding nasty surprises
Let’s be honest:
No forecast will be perfectly right. The OBR gets things wrong every year. So do markets. So do we all.
But that’s not the point.
The point is:
- If you plan for a world of moderate growth, higher costs and a heavy tax environment,
- And if you stress-test your business against that world,
then one of two things happens:
- Things pan out roughly as expected
- You’re fine, because you’ve already baked that into your plan.
- Things turn out slightly better
- Great – you’ve got upside, extra cash, and more room to manoeuvre.
The only really dangerous position is:
“We haven’t thought about any of this and we’ll just react when it hits.”
That’s when you get caught with:
- Thin margins
- Tight cash
- Unexpected tax and finance pressure
…all at once.
How we can help at MDH
This is where we like to move from “accountant” to proper growth partner.
Here’s what an OBR & Budget Debrief looks like with us:
- We summarise the latest OBR and Budget in plain English
- No jargon, no waffle.
- Just: “Here’s what they’re assuming, and here are the bits that actually matter for you.”
- We plug those assumptions into your numbers
- Build or update a three-year forecast for your business.
- Layer in realistic assumptions on wages, costs, interest and tax.
- Show you what happens to profit and cash if the OBR is broadly right.
- We agree a small, sharp action plan
- 3–5 concrete moves on pricing, costs, structure or tax planning.
- Clear owners and timescales.
- A check-in point to review progress.
No economic lectures. No doom. Just:
“Given the likely weather, here’s how we sail the boat.”
If you’d like to stop feeling like a passenger every time the Chancellor speaks, and start using the OBR as a genuine planning tool, let’s do an OBR & Budget Debrief for your business.
You’re already paying the tax.
You may as well use the forecast.
