Chancellor Rachel Reeves presented her latest economic projections to MPs in the Spring Statement 2026. She insisted her plan remains “the right one for Britain”.
Before addressing the Commons, she said the update would show how the government is cutting living costs. She also said it would outline plans to reduce borrowing and grow the economy. However, critics argue that recent tax rises could slow the recovery.
According to the Evening Standard, Reeves delivered her statement during mixed economic conditions. Unemployment is rising. However, retail and export figures have improved.
The Office for Budget Responsibility downgraded its 2026 growth forecast to 1.1%. Previously, it predicted growth of 1.4% at the autumn Budget. However, it upgraded projections for later years. Growth is now forecast at 1.6% in 2027 and 2028. It is expected to reach 1.5% in 2029 and 2030. The OBR said lower net migration influenced these figures.
Inflation stood at 3% in January. That figure fell from 3.4% in December. Food price inflation eased to 3.6% at the start of the year. The OBR expects inflation to fall to 2.3% in 2026. It then forecasts a return to the 2% target from 2027 onwards.
Reeves claimed households will be more than £1,000 a year better off after inflation. However, some economists disagree. They warn that frozen tax thresholds until 2031 will increase the tax burden.
The Chancellor confirmed energy bills will fall by £150 from next month. She described the cut as part of wider support for families.
The OBR said borrowing will be £18 billion lower than forecast in the autumn. Public Sector Net Borrowing will fall from 4.3% of GDP this year. It will drop to 3.6% next year. It will then decline to 1.8% by 2029-30.
Unemployment currently stands at 5.2%. Reeves said it will peak later this year. She expects it to fall to 4.1% by the end of Parliament. However, the OBR forecasts a rise to 5.33% in 2026 before a gradual decline.
The UK adult population will grow from 56.7 million this year to 58.1 million by 2030. However, annual growth is 50,000 lower than November’s forecast. Lower net migration drives this change.
Overall, the Spring Statement 2026 offered a cautious outlook. Growth remains modest. Unemployment may rise in the short term. However, Reeves argued that falling inflation and lower borrowing show improving stability.
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