On 3rd March 2026, Chancellor Rachel Reeves delivered a measured Spring Statement, charting the UK’s evolving economic outlook amid heightened global instability and the fast-developing war in the Middle East. While no major tax or spending announcements were made, updated forecasts from the Office for Budget Responsibility (OBR) paint a clearer picture of where the economy may be heading.
Economic outlook
- Growth expectations for 2026 have been trimmed to 1.1%, reflecting a slightly slower pace than projected in November.
- The medium-term picture brightens modestly, with the OBR now forecasting 1.6% growth in both 2027 and 2028.
- Inflation is expected to settle toward the government’s 2% target by 2027, averaging 2.3% this year.
- Unemployment is predicted to peak at 5.3% before easing gradually to around 4.1% by 2030.
- Reeves emphasised that geopolitical tension in the Middle East is adding new layers of uncertainty to the economic outlook.
Public finances and spending rules
The OBR will wait until the full Budget later this year to confirm whether the Chancellor remains on track with fiscal rules. However, early signs show improved buffers:
- Headroom against the rule on day‑to‑day borrowing has risen to £23.6bn.
- Space within the government’s debt‑reduction rule has grown to £27.1bn.
Housing and mortgages
- Average mortgage rates on existing loans are now expected to edge up from 4.1% to 4.5% by 2030 — slightly softer than previously feared.
- UK housebuilding is projected to dip to 220,000 homes in 2026/27, from early‑2020s levels of around 260,000.
- Construction is then forecast to recover to 305,000 homes annually by 2030/31.
Migration
- Net migration is now expected to be 60,000 lower each year than November’s estimate.
- Annual net migration is projected to fluctuate between 200,000 and 300,000 through to the end of the decade.
- The biggest shift comes from an anticipated rise in the number of UK nationals leaving the country.
Policy revisions and reversals
- Changes to the December announcement on taxing inherited farmland will raise £100m less per year than originally planned.
- January’s decision to ease business rates for English pubs and music venues carries an additional £100m annual cost to the Treasury.
