Chancellor Rachel Reeves will update MPs on the state of the UK economy at around 12.30pm today when she delivers her Spring Statement in the House of Commons.
The statement comes against a backdrop of sluggish growth, rising unemployment and continuing pressure on public finances.
Alongside the Chancellor’s speech, the Office for Budget Responsibility (OBR) will publish its latest forecasts for growth, inflation, unemployment, borrowing, government spending and tax receipts over the coming years.
What is the Spring Statement?
The Spring Statement is not designed to be a major fiscal event like the autumn Budget. Instead, it provides updated economic projections and sets the tone for future policy decisions.
The OBR, an independent watchdog, produces forecasts twice a year assessing the health of the public finances. These figures often shape decisions on whether taxes need to rise or spending must be restrained.
This year, however, there will be no formal judgment on whether the government is meeting its fiscal rules. Ministers have decided that such assessments will now be published only at Budget time.
The two key rules are:
- To stop borrowing for day-to-day spending by the end of this Parliament.
- To ensure public debt is falling as a share of national income by that point.
At November’s Budget, the OBR said the Chancellor had £21.7 billion of “headroom” against her borrowing target. That margin, while presented as a buffer, is relatively slim in the context of overall government spending and leaves limited room for economic shocks.
Although no updated official headroom figure will be provided today, economists are expected to analyse the new data to judge how much flexibility remains.
The latest OBR report will also reflect policy changes since the Budget, including revised inheritance tax rules for farms, business rates changes affecting pubs, and additional funding for special educational needs and disabilities (SEND).
Economic performance under scrutiny
Economic growth remains weak. Official figures show gross domestic product (GDP) rose by just 0.1% in the final quarter of 2025, with growth of 1.3% across the year. When Labour entered office in July 2024, it promised to prioritise stronger growth, but expansion has so far been modest.
In November, the OBR forecast growth of 1.4% in 2026. Many analysts now expect that figure to be downgraded.
Inflation has fallen significantly from its peak of 11.1% in October 2022 but remains above the 2% target set by the Bank of England. Prices rose by 3% in the year to January.
Interest rates are currently 3.75%, and financial markets have been expecting potential cuts later this year. However, continued inflationary pressures — including the recent rise in oil prices — could complicate that outlook.
The labour market has also weakened. Unemployment reached 5.2% in the three months to December, the highest level in nearly five years. Although average wages are still rising faster than inflation, pay growth has slowed to 4.2% excluding bonuses.
Business groups have consistently voiced concerns about the tax burden. In particular, the increase in employer National Insurance contributions introduced last April has raised hiring costs for firms, prompting warnings that it could weigh on job creation.
Limited scope for major changes
Ms Reeves has signalled that she does not intend to announce major tax or spending changes today, preferring to reserve significant policy decisions for the autumn Budget. The government argues this approach reduces uncertainty, though critics say it limits flexibility at a time when economic conditions remain fragile.
The OBR’s forecasts will not include the potential impact of the recent jump in oil prices following strikes on Iran. If higher fuel costs persist, they could feed through into household bills and inflation later in the year.
In February, the Chancellor said she believed 2026 would be the year when households begin to feel the benefits of Labour’s economic reforms.
After today’s statement, the Treasury will publish the full OBR forecast. The opposition, likely represented by Conservative leader Kemi Badenoch or shadow chancellor Mel Stride, will respond in the Commons.
While no dramatic announcements are expected, the figures released today are likely to intensify scrutiny of the government’s economic strategy as growth remains subdued and borrowing pressures continue.
