Rachel Reeves defended her economic plan as being the “right one” as she delivered her spring statement to parliament.<\/p>\n
Her statement came as rising oil and gas prices<\/a> caused by the conflict in the Middle East accelerated a sell-off in gilts and prompted traders to scale back expectations for interest rate cuts from the Bank of England<\/a>.<\/p>\n Speaking in the Commons, Reeves said her economic plan has become \u201ceven more important in a world that in the last few days has become yet uncertain\u201d. The chancellor began her spring forecast statement by saying: \u201cThis government has the right economic plan for our country.\u201d<\/p>\n \u201cWith the unfolding conflict in Iran and the Middle East, it is incumbent on me and on this government to chart a course through that uncertainty, to secure our economy against shocks and protect families from the turbulence that we see beyond our borders.\u201d<\/p>\n She also pointed to easing inflation and lower borrowing costs as evidence that household pressures are starting to abate, adding that new forecasts from the Office for Budget Responsibility (OBR) confirm that “our plan is the right one”.<\/p>\n Read more: <\/strong>FTSE 100 LIVE: London stocks at two-week low as Middle East crisis continues to impact oil and gas prices<\/strong><\/a><\/p>\n Forecasts by the OBR indicated gross domestic product will increase by 1.1% in 2026, down from the 1.4% it forecast in November. But the watchdog upgraded its forecasts for 2027 and 2028 from 1.5% to 1.6%.<\/p>\n The chancellor also said that borrowing is set to reduce by \u201cnearly \u00a318bn compared to the autumn\u201d, and public sector net borrowing is expected to fall from 4.3% this year to 3.6% next year, then 2.9%, 2.5% and 1.8% in 2029-30, she added.<\/p>\n Meanwhile, unemployment is to peak later this year and then fall in every year of the forecast period, ending the period at 4.1% \u2013 lower than it was at the start of the parliament, Reeves announced.<\/p>\n The spring statement did not include any tax and spending changes, as the government has committed to holding a single annual fiscal event, the autumn budget, at which major policy decisions on tax and spending will be set out.<\/p>\n LIVE 31 updates <\/p>\n UK growth for 2026 cut, but faster growth ahead <\/p>\n The Office for Budget Responsibility has \u201cadjusted the profile of GDP so that it grows slightly slower in 2026 and faster in 2027 and 2028\u201d, growing by 1.1% in 2026, 1.6% in 2027 and 2028, and 1.5% in 2029 and 2030, Rachel Reeves has said.<\/p>\n The chancellor told the Commons: \u201cLast year, we demonstrated the resilience of Britain\u2019s economy in the face of global headwinds, with the fastest growth of any G7 country in Europe.<\/p>\n \u201cToday, the Office for Budget Responsibility has updated its growth forecasts, including reflecting lower net migration \u2013 average growth across the forecast period is largely unchanged, while the OBR has adjusted the profile of GDP so that it grows slightly slower in 2026, and faster in 2027 and 2028.<\/p>\n \u201cGDP is forecast to grow by 1.1% in 2026, 1.6% in both 2027 and 2028, and 1.5% in both 2029 and 2030. And GDP per capita is set to grow more than was expected in the autumn, with growth of 5.6% over the parliament, after falling under the Tories in the last parliament.<\/p>\n \u201cAnd by the next election, after accounting for inflation, people are forecast to be over \u00a31,000 a year better off.\u201d<\/p>\n Here are the new forecasts:<\/p>\n<\/li>\n<\/ul>\n David Miles, from the OBR\u2019s budget responsibility committee, said its predictions that inflation will fall to target levels early this year have become \u201cmore uncertain\u201d after jumps in oil and gas prices linked to recent attacks in the Middle East.<\/p>\n He said: \u201cI think what will happen to inflation is particularly uncertain in the past few days.<\/p>\n \u201cAs I mentioned earlier and we all know, there have been very large increases in gas prices and oil prices.<\/p>\n \u201cOur central expectation had been that inflation would fall back towards the Bank of England\u2019s 2% target early this year and will be around that level at the end of the year.<\/p>\n \u201cThere must be more uncertainty around that right now.\u201d<\/p>\n In its forecast, the OBR explained: “Conflict in the Middle East, which escalated as we were finalising this document, could have very significant impacts on the global and UK economies”<\/p>\n<\/li>\n David Rees, head of Global Economics at Schroders, said:<\/p>\n<\/li>\n Grant Slade, economist at Morningstar, has provided insight on the outcome and its implications<\/p>\n<\/li>\n Borrowing is set to reduce by \u201cnearly \u00a318bn compared to the autumn\u201d, with public sector net borrowing expected to fall from 4.3% this year to 3.6% next year, before hitting 1.8% in 2029-30, Rachel Reeves said.<\/p>\n The chancellor told the Commons: \u201cIn their forecasts today, the Office for Budget Responsibility show that we are set to reduce borrowing by nearly \u00a318bn compared to the autumn.<\/p>\n \u201cThis year we are set to borrow less than the G7 average, something the Tories never achieved in fourteen years. The forecast today shows that public sector net borrowing is set to fall from 4.3% this year, to 3.6% next year, then 2.9%, 2.5%, and 1.8% in 2029-30.\u201d<\/p>\n<\/li>\n The Office for Budget Responsibility has also lowered its inflation forecast for this year, although the projection was drawn up before the war in Iran and may already be out of date.<\/p>\n The OBR now predicts CPI inflation will fall to 2.3 % in 2026, down from 2.5 % in its November forecast. The fiscal watchdog continues to expect inflation to run at 2 % per year from 2027, unchanged from previous projections.<\/p>\n<\/li>\n Lale Akoner, global market analyst, said:<\/p>\n<\/li>\n Neil Wilson, UK investment strategist at Saxo Bank, said:<\/p>\n<\/li>\n Susannah Streeter, chief investment strategist at Wealth Club, said:<\/p>\n<\/li>\n The Office for Budget Responsibility has raised its unemployment forecast significantly.<\/p>\n The OBR\u2019s new central forecast is that the unemployment rate rises from 4.75% in 2025 to a peak of 5.3% in 2026.<\/p>\n Back in November, unemployment was expected to hit 4.9%, making this a big downgrade. The OBR has also raised its forecast for 2027 to 4.9%, up from 4.6% previously.<\/p>\n The OBR said: \u201cLabour market weakness still appears to be driven primarily by entrants into the labour force struggling to find work amid subdued hiring demand. We expect this weak demand to continue in the near term as output falls further below the economy\u2019s supply potential.\u201d<\/p>\n Looking further ahead, the OBR expects the unemployment rate to fall gradually to 4.1 % by 2030.<\/p>\n<\/li>\n The Office for Budget Responsibility (OBR) has published its new spring forecasts. It says:<\/p>\n “Government debt as a share of GDP has nearly tripled over two decades, borrowing has remained around 5% of GDP for the past four years, and borrowing costs are among the highest of advanced economies.<\/p>\n “Against this challenging backdrop this interim forecast update is little changed from November. GDP growth averages 1\u00bd per cent from next year and borrowing falls to around 1\u00bd per cent of GDP in 2030-31, which would stabilise debt around 95% of GDP.<\/p>\n “Significant risks, including from conflict in the Middle East, mean outcomes both substantially above and below this forecast are possible.”<\/p>\n This last line acknowledges that the world has changed since the forecasts were drawn up.<\/p>\n<\/li>\n Rachel Reeves closed her spring statement speech by insisting her plan was \u201cthe right one\u201d in a defiant conclusion to her Spring Statement speech.<\/p>\n The chancellor said: \u201cMy plan is the right one. I am in no doubt about how great the rewards can be if we stay the course. The forecasts today confirm that the choices this government has made are the right ones.<\/p>\n \u201cStability in our public finances, interest rates and inflation falling, living standards rising, more children lifted out of poverty, more appointments in our NHS, more investment in our infrastructure, a growing economy, and more money in the pockets of working people.<\/p>\n \u201cMr Speaker, these are the right choices, this is the right plan, and I commend this statement to the House.\u201d<\/p>\n<\/li>\n Rachel Reeves cited forecasts by the economic watchdog that predict inflation will fall despite the threat to global oil and gas supplies from the war in Iran.<\/p>\n The chancellor told MPs that economic stability was \u201cthe single most important precondition\u201d for growing the economy.<\/p>\n She said: \u201cThat is why we have committed to a single major fiscal event each year, limiting major policy changes to the Budget and giving businesses and households the certainty they need. Today, the new forecasts from the Office for Budget Responsibility confirm that our plan is the right one.\u201d<\/p>\n Reeves added: \u201cIn February, the Bank of England confirmed that inflation will fall faster because of the action that I took at the budget. And today, the Office for Budget Responsibility expect inflation to come down even faster than it forecast in the autumn.\u201d<\/p>\n The price of wholesale gas in Europe rocketed by as much as 48% on Tuesday because of the war in the Middle East, a day after rising by 40%.<\/p>\n<\/li>\n The chancellor said she had a \u201cresponsibility\u201d to change Britain as she criticised the Tories\u2019 record in office and claimed Labour had \u201crestored economic stability\u201d.<\/p>\n Rachel Reeves told MPs: \u201cThe previous government let inflation skyrocket to over 11%, stoked interest rates to 15-year highs and delivered the first parliament on record where people were poorer at the end than they were at the start.\u201d<\/p>\n Inflation rose to more than 11% following Russia\u2019s illegal full-scale invasion of Ukraine. By the time of the last general election in July 2024, the Tories under Rishi Sunak had failed to bring inflation back to 2%.<\/p>\n Reeves acknowledged that Labour had campaigned on a promise of \u201cchange\u201d at the last election. She added: \u201cI understand the responsibility on me to deliver that change. I know that the question people will ask themselves at the next general election is this: \u2018Are me and my family better off?\u2019 I am determined that the answer will be yes.\u201d<\/p>\n<\/li>\n The chancellor said her plan is to \u201creshape the economy\u201d.<\/p>\n Rachel Reeves said: \u201cThe plan that I have been driving forward since the election is the right one.<\/p>\n \u201cStability in our public finances, investment in our infrastructure including armed forced, and reform to Britain\u2019s economy.<\/p>\n \u201cIt is a plan to reshape our economy and break with the failed ideas of our past.\u201d<\/p>\n<\/li>\n Rachel Reeves said her plan for the economy was \u201ceven more important\u201d in the wake of the war in Iran.<\/p>\n Reeves told MPs: \u201cThis government has the right economic plan for our country, a plan that is even more important in a world that in the last few days has become yet more uncertain with unfolding conflict in Iran and the Middle East.<\/p>\n \u201cIt is incumbent on me and on this government to chart a course through that uncertainty, to secure our economy against shocks and protect families from the turbulence that we see beyond our borders.\u201d<\/p>\n Reeves thanked British troops and said she was in contact with her international counterparts, the Bank of England and maritime and North Sea industry leaders.<\/p>\n Reeves then reassured MPs that she is in \u201cregular contact\u201d with the governor of the Bank of England, with her international counterparts, and with key sectors affected by the Middle East crisis, including the maritime sector.<\/p>\n<\/li>\n Chancellor Rachel Reeves has begun delivering the spring statement in the House of Commons.<\/p>\n<\/li>\n Rachel Reeves has now left 11 Downing Street to head to parliament, where she will deliver her response to the OBR\u2019s Spring Economic Forecast, which will be published after she speaks.<\/p>\n<\/li>\n Rachel Reeves has said her economic plan is \u201cthe right one for Britain\u201d as she prepares to deliver her second spring statement.<\/p>\n Ahead of addressing the Commons at 12.30, Reeves said on X:<\/p>\n<\/li>\n Expectations for interest rate cuts from the Bank of England have continued to retreat, with swap markets no longer fully pricing in a quarter-point reduction this year and raising the prospect that the central bank\u2019s easing cycle may already have run its course.<\/p>\n Traders are assigning roughly an 85 % probability that the BoE will deliver a single cut by December, according to pricing implied by swaps contracts. The likelihood of a move at this month\u2019s meeting has dropped sharply to about 20%, down from 90% on Friday.<\/p>\n The repricing has rippled through government debt markets. Two-year gilt yields, which are particularly sensitive to shifts in interest rate expectations, have climbed 0.16 percentage points to 4.42 % as investors adjust to the possibility that borrowing costs could remain higher for longer.<\/p>\n<\/li>\n<\/ul>\n Download the Yahoo Finance app, available for<\/strong> Apple<\/strong><\/a> and<\/strong>\u00a0<\/strong><\/a>Android<\/strong><\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"Rachel Reeves defended her economic plan as being the “right one” as she delivered her spring statement to…\n","protected":false},"author":2,"featured_media":801429,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[5018,3,4],"tags":[748,232314,393,4884,1144,156084,619,712,1260,16,15,1764],"class_list":["post-801428","post","type-post","status-publish","format-standard","has-post-thumbnail","category-britain","category-uk","category-united-kingdom","tag-britain","tag-economic-plan","tag-england","tag-great-britain","tag-northern-ireland","tag-obr","tag-rachel-reeves","tag-scotland","tag-spring-statement","tag-uk","tag-united-kingdom","tag-wales"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/116165880539463159","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/801428","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=801428"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/801428\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/801429"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=801428"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=801428"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=801428"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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