What the Spring Statement is
The Spring Statement is built around the latest set of economic forecasts from the Office for Budget Responsibility (OBR). The OBR publishes forecasts twice a year and considers areas such as growth, inflation, unemployment, government spending and tax income.
The OBR also has responsibility for checking whether the government is on track to meet its self-imposed fiscal rules. However, the Spring Statement will not make a formal assessment of this area as this is now only being reviewed once a year, in the autumn.
Even so, the OBR’s numbers are still likely to influence decisions the Chancellor will make later in the year.
The Chancellor’s 2026 Spring Statement focused largely on the UK’s economic outlook and public finances, rather than introducing major new tax measures. Updated forecasts from the Office for Budget Responsibility (OBR) provide insight into the direction of the economy and the government’s fiscal position.
Below are the key points businesses and individuals should be aware of.
Economic Outlook
The OBR has downgraded the UK’s growth forecast for 2026, with the economy now expected to grow by 1.1% this year, compared with the 1.4% forecast at the time of November’s Budget.
Looking further ahead, the outlook is slightly more positive. Economic growth is expected to reach 1.6% in both 2027 and 2028, marginally higher than the 1.5% forecast last autumn.
The labour market is also expected to weaken slightly in the short term, with unemployment predicted to rise to 5.3% this year, before gradually falling to 4.1% by 2030.
Inflation is forecast to average 2.3% in 2026, before returning to the government’s 2% target by 2027.
Government Finances
The Spring Statement highlighted a small improvement in the government’s fiscal position.
The government’s “headroom” against its rule not to borrow for day-to-day spending has increased from £21.7 billion to £23.6 billion, providing a slightly larger buffer.
Headroom against the rule requiring public debt to fall as a share of national income has also increased to £27.1 billion.
However, the OBR will wait until the next Budget before assessing whether the government is fully on track to meet its fiscal targets.
Housing and Mortgage Outlook
The OBR expects average interest rates on existing mortgages to rise from around 4.1% this year to 4.5% by 2030. While still increasing, this projection is lower than previously estimated at the time of the Budget.
Housebuilding is forecast to decline in the short term, with annual construction expected to fall to around 220,000 homes in 2026/27, before increasing to around 305,000 homes per year by 2030/31.
Policy Adjustments
Some previously announced measures have been revised.
Changes made in December to the government’s plans to tax inherited farmland mean the policy is now expected to raise around £100 million less per year than initially forecast.
In addition, the government’s decision to soften business rates for pubs and music venues in England will cost the Treasury an additional £100 million annually.
Other Announcements
The Spring Statement also included updated forecasts on areas such as immigration and population trends, which are expected to fluctuate over the remainder of the decade but were not directly linked to new fiscal measures.
What This Means for Businesses
While the Spring Statement introduced few immediate tax changes, the economic forecasts highlight several factors businesses should monitor, including:
- Slower economic growth in the short term
- Inflation gradually returning to target
- Changes to government fiscal capacity
- Interest rate expectations affecting borrowing costs
Understanding these trends can help businesses make more informed decisions about investment, cash flow planning, and long-term strategy.
Need Advice?
If you would like to discuss how the Spring Statement or the wider economic outlook may affect your business or finances, please contact our team. We are here to help you plan ahead and make informed financial decisions.