Chancellor Rachel Reeves says the CPI inflation target will remain at 2%, the long-term Bank of England target.

Announcing a Budget which will see £40bn in tax rises, Ms Reeves, the UK's first female Chancellor, said that economic stability was her main target, as she presented her first Budget to the House of Commons today.

She added that she would never borrow money to fund day to day spending.

Her pledge to keep inflation to 2% or below was widely expected.

In the most recently announced figures, lower fuel and transport costs helped cut CPI inflation in the 12 months to September to 1.7% from 2.2% in August, below the 2% target.

The decline pushed CPI inflation to its lowest level for three years.

Ms Reeves said she had inherited many economic problems from the Conservatives who had not disclosed some spending gaps. 

In terms of economic forecasts, Ms Reeves says the Office for Budget Responsibility forecasts suggest real GDP growth of 1.1% in 2024, 2.0% in 2025, 1.8% in 2026, 1.5% in 2027, 1.5% in 2028, and 1.6% in 2029.

In changes announced just before the Budget, the Treasury increased the National Living Wage by 6.7% from £11.44 to £12.21 an hour from April 2025, a move she said would benefit 3m workers. The increase will boost pay by £1,400 a year for an eligible full-time worker.

Younger workers on the minimum wage will get the biggest increase of over 16% as their National Minimum Wage rises by £1.40 per hour for 18-20 year-olds, the largest increase on record and a "first step towards a single adult rate."

 • Check back later for updates to this developing story and other Budget coverage.