Chancellor Rachel Reeves has insisted the government has the 'right economic plan' as she delivered a spring statement overshadowed by rising energy prices and the conflict in the Middle East. Addressing MPs, Reeves promised 'economic security in an uncertain world' amid surging oil and gas costs and increasing government borrowing costs.
The Office for Budget Responsibility (OBR) downgraded its 2026 growth forecast to 1.1% from 1.4%, citing weaker-than-expected data in late 2025. Unemployment is predicted to rise to 5.3% this year, up from a previous estimate of 4.9%. However, Reeves highlighted that inflation is down, borrowing is down, and living standards are up, with a fiscal headroom of £23.6bn.
The OBR warned that the expanding Middle East conflict 'could have very significant impacts on the global and UK economies'. Analysts cautioned that the forecasts rely on energy prices returning to normal levels. Ruth Curtice of the Resolution Foundation said sustained high oil and gas prices could push inflation back to 3% by summer, with typical energy bills £500 higher.
Reeves announced she would meet representatives of the North Sea energy industry on Wednesday and is in close touch with Bank of England Governor Andrew Bailey. She said the government would 'chart a course through that uncertainty' and protect families from global shocks.
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 the government's commitment to economic stability.
