Chancellor to Update on UK Economy in Spring Statement
Chancellor Rachel Reeves is set to provide an update on her economic plans for the UK when she delivers the Spring Statement on Tuesday.
The statement will be accompanied by the latest estimates for growth, inflation, unemployment, government spending, and tax income over the coming years.
However, these forecasts will not reflect any potential effects from the recent surge in oil prices caused by strikes in Iran.
While not as significant as the Budget, the Spring Statement can still influence future government decisions regarding tax and spending adjustments.
What is the Spring Statement and Why Does it Matter?
The Spring Statement presents the latest economic forecasts from the Office for Budget Responsibility (OBR), which will be published in full after Reeves' speech in the House of Commons.
The OBR is an independent organization that monitors government spending plans and performance, issuing forecasts twice annually to indicate expected economic performance.
This year's Spring Statement will not include an official assessment of whether the government is on track to meet its tax and spending rules; such assessments will now only be released at the Budget.
At the November Budget, the OBR reported that Reeves would have £21.7 billion in reserve, commonly referred to as "headroom," to meet the first fiscal measure.
These figures are important because the government might reduce spending or increase taxes if it risks failing to meet its fiscal rules.
Despite the absence of an official "headroom" figure from the OBR on Tuesday, independent economists are expected to provide their own evaluations of the government's financial position.
The upcoming OBR report is anticipated to include policy changes announced since the Budget, such as the easing of inheritance tax rules on farms, modifications to business rates for pubs, and increased education spending on special educational needs and disabilities (SEND).
There is speculation that forecasts for government borrowing and inflation could be revised downward, while the outlook for growth and employment may have deteriorated.
When is the Spring Statement?
The 2026 Spring Statement is scheduled for Tuesday, 3 March.
Reeves is expected to begin her Commons speech shortly after midday.
Following her address, the Treasury will publish the OBR's forecast.
Although the OBR is independent and typically publishes its reports separately, last year its analysis was mistakenly released before the chancellor delivered the Budget statement, leading to the resignation of OBR chairman Richard Hughes.
After a security review, the government announced that the OBR's March forecast will be published by the Treasury via its gov.uk platform.
After Reeves' speech, the opposition—likely Conservative leader Kemi Badenoch or shadow chancellor Mel Stride—will respond.
What Might be Included in the Spring Statement?
Reeves is expected to affirm that the government "has the right economic plan for our country… in a world that has become yet more uncertain."
"Because of the decisions we have already taken, we have a stronger and more secure economy."
She is not anticipated to announce major policy changes such as tax or spending alterations, as the chancellor prefers to make significant announcements once a year, typically at the autumn Budget, to avoid ongoing speculation.
Uncertainty surrounding potential measures in last autumn's Budget has been cited as negatively impacting businesses and households.
Nonetheless, some changes could still be announced. Last year's statement confirmed benefit changes, although some were later reversed.
How is the UK Economy Performing?
Since the Labour government took office in July 2024, boosting economic growth has been its primary focus.
However, many economists and politicians remain concerned that the UK economy is not expanding rapidly enough.
Gross Domestic Product (GDP), which measures all economic activity within a country, grew by 0.1% in the last quarter of 2025, slightly below expectations, and by 1.3% over the entire year.
In November, the OBR forecasted 1.4% economic growth for 2026, but analysts now expect this figure to be revised downward.
Inflation, the rate at which prices increase, has eased since peaking at 11.1% in October 2022 but remains above the Bank of England's 2% target.
Prices rose by 3% in the year to January, marking the lowest inflation rate since March 2025, prompting analysts to anticipate a Bank of England interest rate cut from 3.75%.
However, if the recent spike in oil prices following strikes in Iran persists, fuel and other goods such as food could become more expensive, potentially discouraging the Bank from lowering rates.
Unemployment has been gradually increasing, reaching 5.2% in the three months to December, the highest in nearly five years.
Wage growth has slowed but still outpaces inflation, with average pay excluding bonuses rising at an annual rate of 4.2% in the three months to December.
In February, Reeves stated that 2026 would be the year the British public begin to experience the benefits of Labour's policies.
"Is there more to do? Absolutely. But we've created the conditions for growth and I am confident this will be the year we will see the results of that," she said.
Business owners have consistently expressed concerns about the increasing tax burden, particularly regarding the chancellor's employer National Insurance contribution increase implemented last April, which raised hiring costs for firms.
