Chancellor Rachel Reeves has delivered her spring forecast to the House of Commons, insisting that the Labour government possesses the "right economic plan" for a world that has grown "yet more uncertain." The statement, made against a backdrop of surging global energy prices and escalating conflict in the Middle East, presented a mixed economic picture with downgraded growth for the current year but stronger projections ahead.
Downgraded Growth and Fiscal Outlook
Reeves revealed that new forecasts from the independent Office for Budget Responsibility (OBR) show GDP growth is now expected to be "slightly slower" this year, revised down to 1.1% from a previous forecast of 1.4%. This adjustment follows weaker-than-expected data in the final quarter of 2025. However, the chancellor highlighted that growth is projected to strengthen in future years, reaching 1.6% in 2027 and 2028, and remaining unchanged at 1.5% in 2029 and 2030.
The OBR also predicts that unemployment will rise to a peak of 5.3% this year, but Reeves stressed it is then expected to decline to 4.1% by the end of the forecast period—a figure lower than when Labour came to power. Despite instructing the OBR not to judge her against her fiscal rules in this spring forecast, Reeves emphasised that her fiscal buffer, or "headroom," has increased in the latest projections to £23.6 billion, up from £21.7 billion at the time of the November budget.
Energy Prices and Global Uncertainty
The chancellor's statement came as investors fret over the impact of the spiralling conflict in the Middle East, which has driven energy prices higher. The cost of a barrel of Brent crude was up another 7% on Tuesday, reaching $83.20. Reeves confirmed she is in close touch with Bank of England governor Andrew Bailey as they monitor the situation and will meet representatives of the North Sea energy industry on Wednesday.
Analysts have warned that if the price rise proves sustained, it will have a knock-on effect for petrol prices and household utility bills, which Reeves has previously promised to cut. Markets have also been revising down expectations for more interest rate cuts in the coming months, as more costly energy complicates the Bank of England's task in tackling inflation.
Labour's Economic Measures and Future Plans
Reeves asserted that the government has restored economic stability, citing OBR forecasts showing that "inflation is down, borrowing is down, living standards are up and the economy is growing." She argued that the global backdrop makes actions taken on inflation, including shifting green levies to general taxation and freezing bus fares and prescription charges, "even more crucial."
The chancellor also hailed other recent Labour decisions, such as removing the two-child cap on benefits and funding 30 hours a week of free childcare. She promised to take more action on youth unemployment and inactivity in the weeks ahead and highlighted her plan to deliver a lecture later this month about Labour's approach, focusing on the importance of free trade, artificial intelligence, and increasing growth outside London and the south-east of England.
As the Middle East conflict deepens, Reeves pledged to "chart a course through that uncertainty, secure our economy against shocks, and protect families from the uncertainty we see beyond our borders." She added, "I am in no doubt about Britain's ability to navigate the challenges we face." The spring forecast, delivered in a deliberately low-key statement with no substantive policy announcements, underscores the economic headwinds facing the UK while projecting confidence in Labour's long-term strategy.
