New headache for Rachel Reeves as OBR expected to lower productivity forecast

Rachel Reeves is likely to respond by pointing to long-term productivity weakness in the economy and promising to tackle it with investment. Photograph: Toby Melville/Reuters

The Office for Budget Responsibility is expected to downgrade its key productivity forecast, the Guardian understands, setting Rachel Reeves on course to break her fiscal rules without significant action in the budget.

The government’s independent watchdog has carried out a “stocktake” of its forecast models over the summer, and Treasury officials privately acknowledge the result will inevitably be a weaker growth outlook.