Rachel Reeves is aiming to deliver a deliberately uneventful spring forecast on Tuesday, hoping to project calm and competence after a turbulent 18 months in office. The chancellor's team has stressed there will be no policy announcements, with a Treasury source declaring 'the era of rabbits is over'. Reeves plans to spend less than half an hour at the despatch box, welcoming the latest Office for Budget Responsibility (OBR) forecasts and highlighting progress on the cost of living.
The spring statement comes after a series of controversial decisions that have damaged Labour's standing, including cuts to winter fuel allowance, a £25bn national insurance rise, botched welfare cuts, and further tax increases last November. Many of these measures have since been reversed. The party's poor performance in the Gorton and Denton by-elections has put pressure on both Reeves and Prime Minister Keir Starmer, with some backbench MPs concerned about electoral prospects.
Despite the political turmoil, economic conditions have remained relatively stable. Reeves's autumn budget left her with a £22bn fiscal headroom, and little has changed since then. Economic growth was slightly weaker than expected in late 2025, but lower gilt yields have reduced government borrowing costs. January's public finances showed a higher-than-expected surplus, partly due to the national insurance hike, which has boosted revenues even as it is blamed for rising unemployment.
The OBR will need to account for additional spending commitments, including £3.5bn for special educational needs support, and the costs of policy reversals on inheritance tax for farmers and business rates. It must also consider lower-than-expected net migration, which could dent public finances. However, the OBR faces its own challenges, lacking a permanent director after Richard Hughes resigned following an accidental early release of budget forecasts.
Economists expect Reeves to maintain her fiscal headroom. Andrew Wishart of Berenberg noted that with interest rate movements and borrowing on track, 'there will be plenty of headroom'. He added that the national insurance rise, while criticised, is 'doing the business of bringing in more revenue'. The chancellor will insist that Labour has the right plan for fixing the economy, as she seeks to avoid any further drama.
