Chancellor Rachel Reeves has insisted the Labour government has “the right economic plan” after the Office for Budget Responsibility (OBR) downgraded UK growth forecasts for 2026 amid surging energy prices linked to the Middle East conflict. In a low-key spring statement to MPs, Reeves noted that inflation is down, borrowing is down, living standards are up, and the economy is growing, but acknowledged that GDP growth this year is now expected to be 1.1%, down from the previous forecast of 1.4%.
The OBR warned that the escalating conflict in the Middle East could have “very significant” impacts on the global and UK economies. Oil prices rose 6.2% to $82.55 a barrel, while UK month-ahead gas prices jumped 21% to a three-year high. The FTSE 100 suffered its biggest one-day fall in 11 months, losing 2.75%, and global stock markets also declined sharply.
Reeves’s headroom against her fiscal rules has increased slightly, but economists cautioned that the extra room could be wiped out by the energy price spike. The UK’s tax take is set to reach a record high of 38.5% of GDP by 2030-31. Reeves said she is in close contact with Bank of England Governor Andrew Bailey and will meet North Sea energy industry representatives on Wednesday.
Separately, Reach, the publisher of the Mirror, Express, and Star, saw its share price plunge over 12% after reporting a 46% year-on-year decline in traffic from Google in the second half of its financial year. The company cited AI-driven changes to Google’s search and discovery features as a key factor, with CEO Piers North saying “the traffic referral headwinds we have seen have continued into January and February”. Reach reported digital revenues fell 0.9% to £128.9m, though adjusted profits of £104.7m beat market expectations.
