Chancellor Rachel Reeves has insisted Labour has the 'right economic plan' as she delivered a spring statement overshadowed by the conflict in the Middle East. Addressing MPs, she promised 'economic security in an uncertain world' against a backdrop of surging energy prices and rising 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%, up from a previous estimate of 4.9%. Reeves noted that the OBR's forecasts were drawn up before the recent assault on Iran, and warned that the expanding conflict 'could have very significant impacts on the global and UK economies'.
Reeves emphasised that her fiscal headroom had increased to £23.6bn, from £21.7bn at the November budget, aided by lower gilt yields. However, analysts cautioned that the forecasts rely on energy prices returning to normal levels. Ruth Curtice of the Resolution Foundation warned that if oil and gas price increases are sustained, inflation could return to 3% by summer, with typical energy bills £500 higher.
Shadow chancellor Mel Stride accused Reeves of 'utter complacency', comparing her to 'the dodgy estate agent standing in the crumbling building'. Reeves responded by saying she would 'chart a course through that uncertainty' and protect families from global shocks.
