Bold claim: Reeves’s plan is working in an uncertain world, even as growth for the UK is nudged lower for this year.
Chancellor Rachel Reeves has told us that her economic strategy is delivering results, despite a shaky global backdrop. The official forecaster, the Office for Budget Responsibility (OBR), trimmed the expected UK growth for 2026 to 1.1% from 1.4% predicted last year, while updating projections for the years that follow upward. Reeves revealed these numbers during the Spring Statement, noting that inflation is now anticipated to be lower this year than previously thought.
Forecasts were prepared before the latest Middle East conflict, and the OBR warned such events could have a “very significant” impact on both the global and UK economies. Reeves defended the government’s approach, saying there is a sound economic plan in place to shield the country from shocks and to protect families from border-area turbulence.
On inflation, the OBR now expects a 2.3% rate for 2026, down from 2.5% forecast in November, with inflation easing to the Bank of England’s 2% target by year-end 2026. However, a recent surge in oil and gas prices raises the question of whether inflation could re-accelerate if energy costs stay high, potentially limiting the Bank of England’s timetable for rate cuts this year.
The OBR’s latest picture also includes:
- 2027 and 2028 growth upgraded to 1.6% from 1.5%
- GDP per person turning out to be marginally higher than in November, with average annual growth of about 1.1% from 2026 to 2030
- Unemployment peaking around 5.3% this year, up from 4.9% in the Budget
- Tax take forecast to reach a historic high by 2030-31, near 38% of GDP
- Fiscal headroom against the rule not to borrow for day-to-day spending rising from £21.7bn to £23.6bn
Analysts say this extra headroom could give Reeves more room to maneuver in the autumn Budget, though events in the Middle East could still push inflation higher and dampen growth.
Business group reactions were mixed. The British Chambers of Commerce’s Shevaun Haviland said the Spring Statement points the economy in the right direction but needs a stronger acceleration. The Federation of Small Businesses’ Tina McKenzie argued the chancellor missed chances to address upcoming cost pressures, like business rates, and urged readiness to support small firms if energy shocks reappear.
Labour’s central message centers on growth as a catalyst for jobs, higher wages, and more spending power for households, which in turn funds public services through higher tax receipts. At a press briefing, OBR Budget Responsibility Committee member David Miles described late-2025 growth as disappointingly weak, with only tentative momentum into early 2026.
Reeves did not announce new policies in the Spring Statement, reserving major tax and spending decisions for the autumn Budget. She did indicate, however, that a speech later this month would present three pivotal choices shaping the economy’s future: strengthening global ties, dismantling trade barriers, and leveraging artificial intelligence.
In parliamentary remarks, Reeves critiqued past Conservative governments, arguing that their track record left living standards lower than when they started. Shadow Chancellor Mel Stride countered that Reeves’s plan amounts to asking people to pay more in taxes, implying broader job losses and a wave of emigration. Liberal Democrat deputy leader Daisy Cooper called the economy stuck in a growth rut and urged improved trade and defense terms with Europe. Reform UK's Robert Jenrick likened Reeves to a rogue landlord squeezing tenants with higher rents, while Green Party figure Sian Berry urged bolder steps to curb high bills and rents.
Would you agree that the plan is doing enough to stimulate growth, or do you think more aggressive action is needed now to counter rising costs and a fragile outlook? Share your view in the comments.
