Chancellor Rachel Reeves will today assert that people are 'better off' under the Labour government, even as she confronts mounting evidence of a significant economic slowdown. The Chancellor is set to unveil her Spring Statement in the House of Commons, with serious questions looming over the nation's economic performance and stability.
Economic Challenges and Political Claims
Ms Reeves will argue that the government possesses the 'right plan for the country,' pointing to falling inflation and interest rates as factors that are putting money back into people's pockets. However, this Commons address comes against a backdrop of increasing alarm over the developing war in the Middle East, which is already causing oil and gas prices to spiral upwards uncontrollably.
Even before this latest international turbulence, official figures revealed that Britons are actually getting poorer, with GDP per head declining consistently for six consecutive months at the end of last year. With the government making it clear that there will be no major moves on tax or spending this afternoon, all attention will be focused intently on the forecasts from the independent Office for Budget Responsibility.
OBR Forecasts and Fiscal Pressures
The Treasury watchdog is almost certain to follow the Bank of England in downgrading growth projections, as global instability and the impact of Labour's substantial tax measures weigh heavily on economic activity. In early February, the Bank trimmed its estimate for expansion in 2026 to 0.9% from 1.2%, and to 1.5% from 1.6% for 2027.
The OBR could also create major headaches for Ms Reeves by lowering predictions for tax revenues. Ironically, falling immigration—which is regarded as politically positive news for Labour—could place additional strain on the public finances. The independent body will also attach price tags to some of the embarrassing policy U-turns executed by Sir Keir Starmer, including reversals on the farms tax and business rates increases.
Fiscal Targets and Future Tax Implications
Although the OBR will not provide a formal assessment of whether Ms Reeves is on track to meet her fiscal targets, analysts will be able to extrapolate how the figures stand. This analysis could offer an indication of whether Britons face further tax rises in the Autumn, despite hints emerging from the Treasury that Ms Reeves is exploring ways to ease the burden ahead of the next election.
The government has committed to restricting itself to one 'fiscal event' per year for tax and spending policies, which is the Budget in the Autumn. Ms Reeves will tell MPs this afternoon: 'This Government has the right economic plan for our country… in a world that has become yet more uncertain.' She will emphasize 'stability in the public finances, investment in infrastructure, and reform to our economy,' aiming to build growth 'in every part of Britain with a state that doesn't stand back, but steps up.'
Public Perception and Political Support
Ms Reeves will later add: 'Because of the decisions we have already taken, we have a stronger and more secure economy. Inflation and interest rates falling. And in every part of Britain, working people are better off.' Despite this positive tone, polling for the More in Common think-tank suggests that voters remain deeply gloomy about their own economic prospects.
The study found that 58% of voters fear the cost of living crisis may never end, while a further 23% do not believe it will conclude this year. The poll also revealed that Labour is losing support among voters most concerned about the costs of living. Overall, the party retains 54% of those who backed Labour in 2024, but this figure drops to just 38% among those who fear the Chancellor will never effectively address rising prices.
As the Spring Statement unfolds, the Chancellor's assertions of economic improvement will be tested against the harsh realities of downgraded growth forecasts, potential revenue shortfalls, and a skeptical public grappling with persistent financial pressures.
