Rachel Reeves has promised 'economic security in an uncertain world' as she delivered a spring statement overshadowed by the escalating conflict in the Middle East. The chancellor addressed MPs against a backdrop of surging energy prices and rising government borrowing costs, with Brent crude up 7.2% and gas up 23% amid investor fears over the war in Iran.
Reeves confirmed that GDP growth for 2026 has been downgraded to 1.1% from a previous forecast of 1.4%, following weaker-than-expected data in late 2025. However, she stressed that growth is expected to strengthen to 1.6% in 2027 and 2028, and remain at 1.5% in 2029 and 2030. The Office for Budget Responsibility (OBR) also predicted unemployment would rise to 5.3% this year, up from an earlier estimate of 4.9%.
The chancellor highlighted that her fiscal headroom had increased to £23.6bn, from £21.7bn at the time of the November budget, aided by lower gilt yields. However, analysts warned that the forecasts depend on energy prices returning to normal levels. Ruth Curtice of the Resolution Foundation said that if oil and gas price increases are sustained, inflation could return to 3% by the summer, with typical energy bills £500 higher.
Reeves said she is in close contact with the Bank of England governor and will meet North Sea energy industry representatives on Wednesday. She insisted the government has 'restored economic stability' and that Labour has the 'right economic plan' to navigate global uncertainty. The OBR cautioned that the Middle East conflict 'could have very significant impacts on the global and UK economies'.
Shadow chancellor Mel Stride accused Reeves of 'utter complacency', comparing her to a dodgy estate agent standing in a crumbling building. Reeves responded by emphasising the unstable global situation and her commitment to protecting families from economic shocks.
