Rachel Reeves said she had the "right economic plan" for the UK despite the budget watchdog slashing its forecast for growth this year.
The Office for Budget Responsibility indicated gross domestic product will increase by 1.1 per cent in 2026, down from the 1.4 per cent it forecast in November.
But the watchdog upgraded its forecasts for 2027 and 2028 from 1.5 per cent to 1.6 per cent.
Updating MPs on the forecasts in her spring statement, against the backdrop of the war in the Middle East, Ms Reeves said: "This 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."
She added: "The new forecasts from the Office for Budget Responsibility confirm that our plan is the right one - inflation is down, borrowing is down, living standards are up and the economy is growing."
Responding to the statement, shadow chancellor Mel Stride said Ms Reeves addressed the Commons “with nothing to say and with no plan”.
“Unless, of course, doing nothing is a cunning plan to avoid u-turns further down the line,” he said.
Key Points
- Chancellor insists her economic plan is ‘right’ despite OBR slashing growth forecast for 2026
- OBR economic forecasts 'largely unchanged', says Reeves
- Analysis: The Spring Statement exchanges we have all heard before
- Shadow chancellor accuses Reeves of ‘doing nothing’ to avoid u-turns
- Analysis: Rachel Reeves' brutal put down of Farage and Reform
Iran war could have ‘huge influence’ on UK economy, former chancellor says
19:00 , Maryam Zakir-HussainPolitics reporter Athena Stavrou writes:
Former chancellor Jeremy Hunt has warned escalating conflict in the MIddle East has the potential to have a “huge influence” on the UK economy.
Mr Hunt said Britain could see economic disruption similar to the level seen when Vladimir Putin invaded Ukraine in 2022.
“When I was Chancellor, I remember thinking it's just not fair that Putin can have so much influence on the British economy,” he told Times Radio.
“But now we are seeing Iran could have a huge influence on the British economy as well.”
He added that he believed Sir Keir Starmer was wrong for not “going all in with the Americans”, adding the world can no longer place “rules-based international order above all other strategic interests”.
Editorial: By taking on Trump, has Keir Starmer finally found his footing?
18:30 , Maryam Zakir-HussainThe prime minister should be applauded after standing up for Britain’s interests at the expense of America’s – and, rest assured, the special relationship has survived far stiffer tests than this spat with the States:
The Iran war is only days old, but with every hour that passes, it is spreading further out of control. It is thus becoming increasingly clear how sensible – indeed courageous – it was for the prime minister to keep the British out of this conflict, so far as practicably possible.
It may not make much difference to American and Israeli military operations, but it was the right thing to do. That it has caused some strains in the “special relationship” is a matter for regret, but the transatlantic alliance is an old and durable one, and it has recovered from many crises of confidence.
Read more here:
By taking on Trump, has Keir Starmer finally found his footing?
Finally, Rachel Reeves has given Keir Starmer something to smile about
18:00 , Maryam Zakir-HussainWith his chancellor delivering her Spring Statement, the prime minister for once looked happy by her side – because, during a war, no one expects the sums to add up, says John Rentoul:
Finally, Rachel Reeves has given Keir Starmer something to smile about
Reeves accused of being ‘tone deaf’ on energy prices as Middle East crisis deepens
17:45 , Maryam Zakir-HussainRachel Reeves was accused of being “tone deaf” on energy prices as she tried to offer assurances on the impact of Donald Trump’s war with Iran on Britain and insisted Labour’s economic plan was “right”.
Delivering the annual spring forecast, the chancellor defended her fiscal policy, saying the government was in a “better place” to deal with gas and oil price shocks than it was after the last general election amid growing tensions in the Middle East.
But she was challenged by Labour and opposition MPs over a need to have a plan to cap energy bills if the war escalates further.
Read more here:
Reeves accused of being ‘tone deaf’ on energy prices as Middle East crisis deepens
Lib Dem deputy leader says spring statement showed country was 'stuck in a doom loop'
17:30 , Maryam Zakir-HussainLiberal Democrat deputy leader Daisy Cooper said the spring statement showed the country was "stuck in a doom loop of low economic growth".
Ms Cooper called on the Government to take a series of steps, including getting a better trade and security deal with Europe, to "get Britain growing again".
She said: "The country has paid the price for two anti-growth Labour budgets and the OBR today is clear, the downgrade in 2026 in growth is bigger than the upgrade in the next two years combined.
"We have got to stop the short-term cycle of short-term Treasury tax grabs over long-term growth."
She added: "We must accept that we are stuck in a rut, stuck in a doom loop of low economic growth, and that is a big problem."
She was met with jeers from the Labour benches when she said university graduates were being "ripped off" due to repayment costs, with the Chancellor saying fees were raised while the Lib Dems were part of the coalition government.
What we learnt from Rachel Reeves’ spring statement – and what it means for you
17:16 , Maryam Zakir-HussainRachel Reeves has insisted she has the “right economic plan” for the country despite the budget watchdog slashing its growth forecast for the year and growing fears over the impact of the war in the Middle East.
After promising to only have one major fiscal event each year - taking the form of the Autumn Budget - Rachel Reeves’ spring statement was devoid of any tax and spending changes.
Instead, she provided a broad update on the nation’s finances in the face of mounting global instability.
Here, The Independent looks at everything we learnt and what it means for you:
What we learnt from Rachel Reeves’ spring statement – and what it means for you
Country will 'start to fall apart' if government fails to make life affordable
17:00 , Maryam Zakir-HussainIf the government fails to make life affordable for voters then the country "will start to fall apart", a Labour MP has said.
Speaking to the Press Association, Dr Jeevun Sandher - who sits on the Treasury select committee - warned: "For us as a government, for us as a country, for us as a democracy, we have to make life affordable.
"If we don't, yes I am out of a job... in four years time. But more importantly, this country will start to fall apart.
"We inherited a difficult situation. We are in a good place today, a better place today but there is much further to go. I wouldn't deny that and we absolutely want to beat those forecasts."
He added it is necessary to increase defence spending in order to keep Britain and Europe safe.
"The first job of this government is to protect us. The only way you prevent war is by preparing for it," he said.
Corbyn calls spring statement 'very sad' for Labour
16:50 , Maryam Zakir-HussainJeremy Corbyn, leader of Your Party, has described the spring statement as a "non-event" and "very sad" for a Labour government.
The former Labour leader said: "By June, when the next round of gas price increases come in for consumers, the government will have to come in with its support system to prevent them from getting too high.
"The £21 billion headroom that Rachel Reeves claims she has will be gone."
Mr Corbyn also called for rent controls, an increase in the living wage, and the introduction of a new rate of top taxation.
He also warned the government that graduates have little hope of paying back their student loans. He added: "At some point some the government is going to have to face the reality that some of those debts are never going to be paid."
Shadow chancellor critcises Reform for failing to make properly-funded spending commitments
16:35 , Maryam Zakir-HussainShadow chancellor Sir Mel Stride has criticised Reform UK for failing to make properly-funded spending commitments.
Speaking to the Press Association outside Parliament, he said of Nigel Farage's party: " "I think what they are is a bunch of fantasy economists. That's the problem.
"They went into the last election with £140 billion of unfunded spending and tax commitments.
"Their offer to pubs and high streets has a £10 billion black hole and yet what we heard the Reform spokesman say on Radio 4 is 'I don't care about the numbers'."
Sir Mel also said the Chancellor's statement failed to provide a "clear plan to get spending under control".
He added: "The big distinction between us and Labour is we believe that living within our means, getting public spending under control, particularly the welfare bill.
"If you get people off benefits and into work, you can use those savings."
UK to send warship HMS Dragon after Cyprus base hit by drone
16:26 , Maryam Zakir-HussainThe UK will send helicopters with counter-drone capabilities and air defence destroyer HMS Dragon to protect British military personnel in Cyprus, the Prime Minister has said.
Sir Keir Starmer confirmed the UK would be sending HMS Dragon, one of the Royal Navy's six Type 45 air defence destroyers, after RAF Akrotiri on Cyprus was hit by a drone.
Sir Keir posted on X: "The UK is fully committed to the security of Cyprus and British military personnel based there.
"We're continuing our defensive operations and I've just spoken with the president of Cyprus to let him know that we are sending helicopters with counter-drone capabilities and HMS Dragon is to be deployed to the region.
"We will always act in the interest of the UK and our allies."
PM says UK is 'fully committed to the security of Cyprus and British military'
16:21 , Maryam Zakir-HussainIn a statement posted on social media site X, Prime Minister Sir Keir Starmer said: "The UK is fully committed to the security of Cyprus and British military personnel based there.
"We're continuing our defensive operations and I've just spoken with the President of Cyprus to let him know that we are sending helicopters with counter drone capabilities and HMS Dragon is to be deployed to the region.
"We will always act in the interest of the UK and our allies."
Donald Trump is about to make Americans – and the rest of us – much poorer
15:49 , Maryam Zakir-HussainA war launched without a clear set of aims and a plan for what happens “the day after” is not only bad news for those who try and fight it, but also for the folks back home, writes Sean O’Grady.
That’s because such conflicts tend to be less winnable, to drag on far longer and then end inconclusively.
The 10,000-day war in Vietnam was like that, as were all of the 21st-century conflicts across the Middle East, and, indeed, the Russian full-scale invasion of Ukraine. If – and we must hope not – the American-Israeli attack on Iran spreads and turns into yet another forever conflict, then its effects will be not just be geopolitical but economic.
Read more here:
If you thought the cost of living was bad, wait for the ‘Iran shock’
Watch: Ed Davey slams ‘washed up old footballers and tax exiles’ in Dubai seeking UK protection
15:30 , Shaheena UddinUS still ‘staunch ally’ after Trump rebuke, No 10 says
15:20 , Shaheena UddinDowning Street has said the US is still a “staunch” ally after Donald Trump launched another criticism against Sir Keir Starmer over the Middle East war.
The US president said Sir Keir had “not been helpful”, after saying he was “very disappointed” that the UK had initially not allowed the US to launch strikes from its bases over the weekend.
Chancellor of the Duchy of Lancaster Darren Jones earlier said the US and Israel’s initial strikes in Iran did not “meet the test the Prime Minister has set out”, as he was questioned about the extent of British support for America’s course of action.
Meanwhile, the Foreign Secretary confirmed that a Government charter flight will take off from Muscat, Oman, “in the coming days” to bring vulnerable British nationals back.
And after a British base on Cyprus was hit by a drone, the UK is understood to be considering sending a Type 45 air defence destroyer to the region.
Mr Trump had claimed Sir Keir had “not been helpful” and called the transatlantic rift “very sad” in an interview with the Sun on Monday.
“This was the most solid relationship of all. And now we have very strong relationships with other countries in Europe,” he said.
Reeves to meet North Sea energy bosses tomorrow
15:15 , Maryam Zakir-HussainPolitical writer Athena Stavrou reports:
Rachel Reeves is set to meet North Sea energy bosses on on Wednesday to discuss oil and gas prices amid uncertainty over the impact of the war in the Middle East.
It is understood the chancellor will speak to them about the future of oil and gas in the UK, after prices were sent soaring by Iran’s threats to a crucial shipping route.
She told the Commons: “I want to reassure this House that I am in regular contact with the governor of the Bank of England (Andrew Bailey), with my international counterparts and with key affected industries, including our maritime sector, and tomorrow, I will meet with our North Sea industry leaders to discuss the implications that they face and work with them to manage this uncertain period.”
OBR's predictions 'more uncertain' due to Middle East war
15:15 , Shaheena UddinDavid Miles, from the OBR’s budget responsibility committee, said its predictions that inflation will fall to target levels early this year have become “more uncertain” after jumps in oil and gas prices linked to recent attacks in the Middle East.
He said: “I think what will happen to inflation is particularly uncertain in the past few days.
“As I mentioned earlier and we all know, there have been very large increases in gas prices and oil prices.
“Our central expectation had been that inflation would fall back towards the Bank of England’s 2% target early this year and will be around that level at the end of the year.
“There must be more uncertainty around that right now.”
Labour MP says country 'will start to fall apart' if government fails to make life affordable
15:10 , Shaheena UddinIf the Government fails to make life affordable for voters then the country “will start to fall apart”, a Labour MP has said.
Dr Jeevun Sandher – who sits on the Treasury select committee – told the Press Association: “For us as a government, for us as a country, for us as a democracy, we have to make life affordable.
“If we don’t, yes I am out of a job… in four years time. But more importantly, this country will start to fall apart.
“We inherited a difficult situation. We are in a good place today, a better place today but there is much further to go. I wouldn’t deny that and we absolutely want to beat those forecasts.”
He added it is necessary to increase defence spending in order to keep Britain and Europe safe.
“The first job of this government is to protect us. The only way you prevent war is by preparing for it,” he said.
Impact of gas prices on UK households will depend on length of Middle East war
15:07 , Shaheena UddinThe Independent’s political reporter Athena Stavrou writes:
Rachel Reeves declared on Tuesday that the latest Office for Budget Responsibility (OBR) forecast showed that she had “right economic plan”.
But there is widespread concern that the watchdog’s forecast does not include an assessment of the impact of the events unfolding in the Middle East.
Oil is up by almost 18 per cent in a week while the price of natural gas has shot up by 93 per cent since the conflict began - its highest level since early 2022.
It is understood that the government are preparing to monitor the impact of family finances very closely, but the longer oil and gas prices remain at their current levels, the harder it is expected to be.
OBR warns inflation caused by Middle East conflict could push up cost of paying UK’s debt
15:06 , Shaheena UddinThe Independent’s Whitehall editor Kate Devlin reports:
The OBR has warned that one of the short term impacts of the conflict in the MIddle East could could be to push up “the cost of welfare, debt interest and potentially also departmental spending”.
Tory foreign minister accuses Reeves of 'gaslighting' the public over defence spending
15:05 , Shaheena UddinRachel Reeves has been accused of “gaslighting” the British people over defence spending, as a Tory former minister urged the Chancellor “to face reality”.
Dame Caroline Dinenage claimed “the Chancellor’s words on defence just simply do not reflect the reality at a time when the world has never felt more unstable”.
“Every corner of our armed forces is currently being asked to find cuts,” she said.
The Conservative MP for Gosport added: “This is the first year since the 1980s that we haven’t had a ship in the Gulf – at a time when the Middle East is a tinderbox.
“The RFA (Royal Fleet Auxiliary) is on its knees. Defence companies are being tied up with bureaucracy, dither and delay.
“She’s gaslighting the British people. This is a disaster. This is a disaster for our defence. It’s a disaster for our armed forces. When is she going to face reality?”
Ms Reeves replied: “I am the Chancellor that has overseen the biggest uplift in defence spending since the end of the Cold War. We are spending more on defence than the previous government was spending.
“And that is why yesterday, I was able to announce a helicopter contract worth £1 billion.”
“I won’t take any lessons, frankly, from the party opposite when we are increasing defence spending and they oversaw a cut,” she added.
Ms Reeves also pointed to the recently announced £1 billion contract with helicopter maker Leonardo, which is expected to secure 3,300 British jobs.
What we learnt from Rachel Reeves’ spring statement – and what it means for you
15:04 , Shaheena UddinRachel Reeves has insisted she has the “right economic plan” for the country despite the budget watchdog slashing its growth forecast for the year and growing fears over the impact of the war in the Middle East.
After promising to only have one major fiscal event each year - taking the form of the Autumn Budget - Rachel Reeves’ spring statement was devoid of any tax and spending changes.
Instead, she provided a broad update on the nation’s finances in the face of mounting global instability.
The Independent’s political correspondent, Millie Cooke reports:
What we learnt from Rachel Reeves’ spring statement – and what it means for you
Starmer carries out mini-reshuffle after Josh Simons' resignation
15:03 , Shaheena UddinSir Keir Starmer has conducted a mini-reshuffle of junior ministers after Labour MP Josh Simons’ resignation, amid controversy surrounding a think tank that he used to run.
James Frith has replaced Mr Simons as parliamentary secretary in the Cabinet Office, after allegations that Labour Together paid a PR firm to investigate the background of journalists who had written stories about it.
A probe by the Prime Minister’s ethics adviser found Mr Simons had not breached the ministerial code, but the Makerfield MP said he had “become a distraction” and stood down at the weekend.
Bury North MP Mr Frith has taken over his brief as junior Department for Science, Innovation and Technology (DSIT) minister and parliamentary secretary in the Cabinet Office.
Baroness Ruth Anderson, who was already a whip, also becomes a parliamentary secretary in the department, while Washington and Gateshead South MP Sharon Hodgson has been made a junior health minister.
Ms Hodgson takes on the role after Ashley Dalton, who has advanced breast cancer, left Government on Monday to manage her condition while remaining MP for West Lancashire.
Mr Simons had faced calls to stand down after Labour Together was accused of paying Apco Worldwide £36,000 to look into the background of reporters in 2023, when he was the think tank’s director.
Former Chancellor Jeremy Hunt criticises Reeves budget promises
15:00 , Shaheena UddinRachel Reeves’s “budget promise to reduce household energy bills by £150 is going to ring hollow for many people”, a Conservative former chancellor has said.
Sir Jeremy Hunt also told the Commons: “If cost of living is the real concern, isn’t the biggest mistake to increase taxes by £66 billion? That is the equivalent of nearly £2,300 per household.
“And if that money’s needed for public services, nearly all of that – £54 billion, in fact – could be got by reducing the welfare bill to 2019 levels, so is it sustainable to keep raising taxes on people in work in order to pay evermore benefits to people not in work?”
Chancellor Rachel Reeves said Mr Hunt had “left a massive black hole in the public finances”, adding: “It is a bit rich for the party opposite to say that we should bring welfare spending down when they presided over a huge increase in welfare spending.”
Ms Reeves said “it is those with the broadest shoulders that are paying higher taxes”, pointing to non-domicile tax status reform, the high value council tax surcharge, and VAT on private school fees.
Conservative former minister John Glen said Covid-19 had “significantly scarred the economy”, asking: “Will she grip welfare spending at a time of grave insecurity in the world?”
Ms Reeves replied the Conservatives “presided over a 130,000 increase in young people not in education employment or training”, and added the Government had made reforms to Universal Credit “to narrow the gap between the health element and the standard element”.
Chancellor says the Treasury is in a 'better place' to deal with gas and oil price surges
14:55 , Shaheena UddinChancellor Rachel Reeves has said the Treasury in a “better place” to deal with gas and oil price surges than it was 18 months ago from the “mess” left by the Tories.
Labour MP Yuan Yang said stronger cooperation with European governments “is crucial for bringing down the cost of food and for healing the economic self-harm done by the party opposite”.
The MP for Earley and Woodley added: “The Bank of England has said that her cuts to energy bills will help bring inflation down to around its target from next month. Will she commit to going further and continue to shield our constituents from global price shocks?”
Responding, Ms Reeves told the Commons: “The Bank of England forecasts that the actions that I took in the budget last year would reduce inflation by around 0.4 percentage points and that inflation would be back close to target from April.
“That reflects not just taking £150 of energy bills but also freezing prescription charges and freezing rail fares as well.
“Of course, the events unfolding in Iran and the Middle East have resulted over the last couple of days in gas prices going up by more than 60 per cent and oil prices going up by more than 10 per cent, which shows why the plan that we’ve had to take money off energy bills but also ensure our public finances are in a stronger place mean that we’re in a better place than we would have been 18 months ago after the mess left by the party opposite (the Conservatives).”
Risk that SEND reforms could increase government spending, forecasters say
14:50 , Shaheena UddinThere is a risk that Government reforms to the special educational needs and disabilities (SEND) system could increase spending in the short term if there is an increase in assessments for support, forecasters have said.
The £4.1 billion in funding announced for Department for Education (DfE) budgets has “materially reduced” a £6.3 billion Send funding pressure the Government was facing, the Office for Budget Responsibility (OBR) said in its spring forecast.
However, the impact of the reforms on the cost of the system are still uncertain, the OBR added.
The DfE has estimated the number of education, health and care plans (EHCPs) issued will continue to grow, though at a slower rate, until 2029/30. After this, EHCP numbers are forecasted to start falling as the reforms come into effect.
“However, the Government has not set out specifically how the reforms will deliver this or provided estimates of any related cost savings,” the OBR said.
UK government charter flight to evacuate British nationals from Middle East ‘in coming days’
14:45 , Shaheena UddinA government charter flight to evacuate British nationals left stranded by the escalating US-Iran war will take off from Oman “in the coming days”, the has foreign secretary confirmed.
Yvette Cooper also told the Commons 130,000 British nationals have signed up to the “register your presence” programme in the Middle East that allows them to receive updates from the British government as conflict in the Middle East ramps up.
The Independent’s Bryony Gooch reports:
UK charter flight to evacuate British nationals from Middle East ‘in coming days’
UK unemployment to worsen according to the OBR
14:44 , Shaheena UddinUK unemployment is set to worsen further to about 5.3 per cent while economic growth forecasts have also been cut, the UK’s official forecaster has said.
The Office for Budget Responsibility added that unemployment would be higher than expected for the next two years, amid pressure from “subdued hiring demand” for new workers.
Chancellor Rachel Reeves told Parliament that the OBR said the UK economy would grow more slowly than previously expected in 2026, although growth will pick up in the following years.
UK gross domestic product (GDP) is expected to grow by 1.1 per cent in 2026, as the OBR reduced its previous prediction of 1.4 per cent from last November.
The budget watchdog said the downgrade was linked to a growth slowdown late last year, loosening in the labour market and subdued data from recent business surveys.
However, it also increased its forecasts for growth for both 2027 and 2028, with the economy to expand by 1.6 per cent in both years.
The Chancellor said she had the “right economic plan” for the UK as she laid out her spring statement on Tuesday.
Ms Reeves also said that unemployment is “set to peak later this year” before reducing over the following years.
The OBR said that the UK unemployment rate is on track to peak at about 5.33 per cent in 2026.
Latest data from the Office for National Statistics (ONS) showed that unemployment lifted to a five-year-high of 5.2% in the three months to December.
The OBR had previously predicted that the jobless rate would increase to 4.9 per cent in 2026.
UK remains 'staunch' ally of US, Starmer says
14:10 , Maryam Zakir-HussainOur political correspondent Millie Cooke reports:
While the chancellor was delivering her spring statement, questions continued on the UK’s position on the conflict in the Middle East.
The prime minister’s spokesperson said the UK remains a “staunch” ally of the United States, in the wake of Donald Trump's attacks on his foreign policy.
When asked how the Sir Keir Starmer would describe the special relationship between the two countries, he said: “The UK’s relationship with the US is we are staunch allies. It is reflected in decades of that special relationship, whether it is on national security, on trade or beyond.”
It came after Donald Trump said he is “very sad” to see that the US relationship with the UK is “obviously not what it was”.
Hitting out at Sir Keir directly, the US president said: “He has not been helpful. I never thought I’d see that. I never thought I’d see that from the UK. We love the UK.”
'A quieter spring statement is exactly what Britain’s businesses need', CEO says
14:08 , Shaheena UddinA CEO has chimed in with a positive response to the chancellor’s spring statement.
Chris Waring, CEO of ‘thisbank’ said: "A quieter spring statement is exactly what Britain’s businesses need. They don’t need drama, they need clarity. Confidence is already fragile, and geopolitical tensions and global volatility continue to create instability, with this week only exacerbating this.
He added: “A quieter spring statement doesn’t signal a lack of ambition for the UK economy; it signals control. For banks, it supports sustainable product pricing. For businesses, it enables confident investment decisions. For households, it means fewer sudden shocks and more confidence when managing everyday finances, from savings decisions to longer-term planning.
“Limiting major fiscal events to once a year reduces the risk of constant market repricing and helps support a steadier interest-rate environment.In an uncertain world, steadiness is strength. Steadiness in fiscal policy is foundational to supporting savers, businesses, and the wider economy.”
Lib Dems deputy leader says UK 'stuck in doom loop of low economic growth'
14:01 , Shaheena UddinLiberal Democrat deputy leader Daisy Cooper commented on the spring statement and said it showed the country was “stuck in a doom loop of low economic growth”.
Ms Cooper urged the Government to take actionable steps, including securing a better trade and security deal with Europe, to “get Britain growing again”.
She said: “The country has paid the price for two anti-growth Labour budgets and the OBR today is clear, the downgrade in 2026 in growth is bigger than the upgrade in the next two years combined.
“We have got to stop the short-term cycle of short-term Treasury tax grabs over long-term growth.”
She added: “We must accept that we are stuck in a rut, stuck in a doom loop of low economic growth, and that is a big problem.”
She received jeers from the Labour benches when she said university graduates were being “ripped off” due to repayment costs, with the Chancellor responding that fees were increased while the Lib Dems were part of the coalition government.
At a glance: What is in the OBR forecast?
13:56 , Maryam Zakir-HussainHere are the key takeaways from the OBR forecast released today:
- The economy is expected to grow by 1.1 per cent in 2026, down from the 1.4 per cent originally forecast in November
- Inflation is forecast to fall faster than previously thought, reaching 2.3 per cent this year
- Unemployment is expected to rise and peak at 5.3 per cent, up from a 4.9 per cent peak forecast at the Budget
- There will be a lower net migration as around 50,000 Brits a year will leave the country
- The conflict in the Middle East could have “a very significant impact” on the economy- and the escalation began as the OBR was finalising its projections
OBR predicts 50,0000 more Brits a year will leave the country
13:45 , Maryam Zakir-HussainOur Whitehall editor Kate Devlin reports:
The Office for Budget Responsibility is predicting “lower net inward migration”.
It adds: “We have lowered our central forecast for overall net inward migration by around 60,000 people (50,000 adults) a year on average.
“This is driven entirely by a more negative assumption for net migration by British nationals.”
Badenoch urges Starmer to ‘act’ in the Middle East
13:45 , Maryam Zakir-HussainPolitical writer Athena Stavrou reports:
Kemi Badenoch has piled more pressure onto Sir Keir Starmer to take further action in the Middle East.
The prime minister gave US forces permission to use British bases to strike Iranian ballistic missile depots and launch sites on Sunday.
However, Sir Keir has faced criticism for not giving Donald Trump the green light sooner, or taking further action in the region after an RAF base in Cyprus was hit in a drone attack.
Conservative leader Kemi Badenoch wrote on X: “Our bases are under attack. British citizens are in danger across the Middle East.
“Our allies are removing a regime responsible for planning 20 lethal attacks on Britain. And this is the Government's response.
“We have to act in our national interest.”
Shadow chancellor says government 'undermined' country's potential
13:40 , Maryam Zakir-HussainRachel Reeves shouted "what" and pointed at her papers as shadow chancellor Sir Mel Stride said the government has "undermined" the country's potential with the "terrible state of our public finances".
Sir Mel said: "The chancellor has the temerity to suggest that she is creating the conditions for renewed growth.
"She is rather like the dodgy estate agent standing in the crumbling building with the roof gone, the windows gone, with the floor gone, and saying, 'just think of the potential'. But that potential has been undermined by the terrible state of our public finances."
Reeves hit back at shadow chancellor's response to the spring statement
13:35 , Maryam Zakir-HussainRachel Reeves hit back at Sir Mel Stride's response to the spring statement, telling him his party had repeatedly got its predictions wrong on the economy.
Speaking in the Commons, Ms Reeves said: "Whether it is in office or in opposition, the right honourable gentleman's party, and his leader, have been wrong about the economy time and time again.
"They opposed economic responsibility and backed Liz Truss. Wrong. They opposed closer ties to Europe and backed Brexit. Wrong. They opposed cuts in child poverty and want to repeat austerity. Wrong values, wrong economics, they are just plain wrong."
Ms Reeves said previous predictions made by Conservative leader Kemi Badenoch about rising borrowing had been proven incorrect. The Chancellor said living standards and growth have all risen under the Labour Government.
She said: "Let me break it to him and to his leader. There is no blank page for the Tory Party, no year zero, they gave us chaos and instability, Labour is fixing it. They gave us austerity, Labour is investing in Britain. They gave us 14 years of barely managed decline and we are reversing it.
"Now we know that if they ever get the chance, they'll do it all of the same again. More chaos, more kids in poverty, more and deeper cuts."
She added: "It would be terrifying, if there was any prospect at all that they would ever win an election again. The leader of the opposition can keep turning up every week, but it's a total waste of time. Their party is the past, and not the future."
'Reeves wanted a non-event and she got it'- Expert commentary
13:33 , Maryam Zakir-HussainMatthew Amis, investment director at Aberdeen, said: “Chancellor Reeves wanted a non-event and we got a non-event. Fiscal headroom slightly higher if you squint. Gilt issuance maybe a touch higher, long issuance maybe a touch higher but nothing in the detail that will be driving gilt yields.
“The geo-politics and the surge higher in energy prices are the only game in town and Chancellor Reeves’ Spring Statement will not be changing that.”
OBR warns conflict in the Middle East risks ‘very significant’ impact on UK economy
13:29 , Maryam Zakir-HussainWhitehall editor Kate Devlin reports:
The Office for Budget Responsibility warns that the conflict in the Middle East, which “escalated” as the experts finalised their projections, "could have very significant impacts on the global and UK economies”.
When it comes to the global economy, this risks being “particularly (in) energy markets”, they add.
The OBR’s official report, published alongside the spring statement, warns that “the geopolitical situation and global trade policy remain highly volatile”.
Expert says statement 'bought the government time'
13:27 , Maryam Zakir-HussainReaction to the spring statement is now coming in from experts.
Harry Quilter-Pinner, executive director at the Institute for Public Policy Research, said the statement “bought the government time”.
He said: "The spring statement delivered what many expected: a slight adjustment to the economic forecast, not a major fiscal reset.
"With less than 100 days since the last event, there were no dramatic revisions, and the Chancellor's decision to double headroom has done its job, cushioning small forecast changes without forcing tax rises or spending cuts.
"But lower net migration poses a medium-term risk to public finances, while renewed conflict in the Middle East risks pushing up energy prices and adding to inflationary strain on households and businesses.
"The real test now is not short-term headroom but building on the economic momentum. The spring statement has bought the government time, it must now use it.”
"That means focusing on broadening industrial strategy beyond energy into defence and advanced manufacturing, and doubling down on a 'war on bills' to tackle the cost-of-living crisis."
Shadow chancellor brands spring statement a 'surrender statement'
13:23 , Maryam Zakir-HussainShadow chancellor Sir Mel Stride branded the spring statement a "surrender statement", and accused the Government of giving up on the British people.
He said: "Is that it? What utter complacency, a Chancellor in denial. She speaks of stability, what planet is (the Chancellor) on?
"She has lurched from putting up taxes to destroying growth, to destroying headroom, to coming back to putting up more taxes, more growth destroyed. Round and round we go, like a fiscal twister ripping up everything in its path.
"As our economy bleeds out, what does (the Chancellor) do? She comes to this house with nothing to say and with no plan, unless of course doing nothing is a cunning plan to avoid those u-turns further down the line."
Sir Mel added: "She is weak. She has even stripped the OBR of its ability to assess whether she is meeting her fiscal targets. So, let it be remembered that at this time in this chamber, this weak and chaotic government gave up on the British people.
"She has nothing to say to us today. This is not a spring statement, it is a surrender statement."
Watch: Shadow chancellor responds to Reeves' Spring Statement: 'What planet is the right honourable lady on?'
13:22 , Maryam Zakir-HussainReckless borrowing must be rejected, Reeves says
13:21 , Maryam Zakir-HussainThe temptation of easy answers and reckless borrowing must be rejected, Rachel Reeves said, as she warned progress could be "wiped out by a change of course".
Im her spring statement, she told the Commons: "Every pound that we have invested, every pound in the pockets of working people, every pound that we have secured in the forecast today, can be wiped out by a change of course.
"So, we must reject a return to austerity, to protect our public services and invest in Britain's future, we must reject the temptation of easy answers and reckless borrowing, to protect family finances and get the cost of living down.
"And, we must reject the political instability which would put at risk all the progress we have made.
"My 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."
Unemployment set to rise according to the OBR
13:20 , Maryam Zakir-HussainDavid Maddox, political editor, reports:
Rachel Reeves has been called a “jobs killer” for her tax hike on employer national insurance contributions and the OBR findings seem to suggest that may be the case.
It predicts that unemployment is set to rise.
The report states: “Labour market conditions continue to loosen so the central forecast is for the unemployment rate to rise from 4.75 per cent in 2025 to a peak of 5.13 per cent in 2026.
It adds: “Labour market weakness still appears to be driven primarily by entrants into the labour force struggling to find work amid subdued hiring demand.”
Reeves faced with long list of fiscal u-turns
13:15 , Maryam Zakir-HussainPolitical reporter Athena Stavrou writes:
Responding to Rachel Reeves’ spring forecast, shadow chancellor Mel Stride listed the humiliating string of government u-turns.
“She and the prime minister have no backbone when it comes to taking difficult decisions,” the Conservative frontbencher told the Commons.
“Before the Budget; Winter fuel payment, u-turn. Welfare reform, u-turn. Two-child benefit cap, u-turn.“And in the short period of time after the Budget Mr Speaker; Farm tax, u-turn. Family business tax, u-turn. Public houses, u-turn.”
Shadow chancellor accuses Reeves of ‘doing nothing’ to avoid u-turns
13:09 , Maryam Zakir-HussainPolitical reporter Athena Stavrou writes:
Rachel Reeves has finished delivering her spring forecast, and shadow chancellor Mel Stride is now delivering his response.
The Conservative frontbencher accused the chancellor of addressing the Commons “with nothing to say and with no plan”.
“Unless, of course, doing nothing is a cunning plan to avoid u-turns further down the line,” he said.
The spring forecast has differed in what it has delivered in previous years, as it did not include any new fiscal policy for the first time.
Instead, Rachel Reeves outlined and responded to the latest economic forecasts from the Office for Budget Responsibility (OBR), due to be published imminently.
Analysis: The Spring Statement exchanges we have all heard before
13:07 , Maryam Zakir-HussainPolitical editor David Maddox writes:
During her spring statement Rachel Reeves went back to that old favourite of this government with at least seven mentions of the nebulous term “working people”.
There was not much mention of growth but lots of her other old favourite “stability”, a word beloved by former Tory PM Theresa May.
But in his response we are seeing some well trod attacks from shadow Tory chancellor Mel Stride starting with his claim that “this is not a Spring Statement it is a surrender statement.”
His careful repeating of the “U-turns” with Tory MPs chanting the word behind him is a familiar and almost weekly tactic - although to be fair the government has provided plenty of ammunition in that respect.
But if you feel like you have heard it a lot before it is because you have.
Tories ‘squandered Britain's credibility’, Reeves says
13:06 , Maryam Zakir-HussainPolitical reporter Athena Stavrou writes:
Rachel Reeves has hit out at the Tory record in government as she delivers her spring forecast.
The chancellor said 14 years of Tory government had “squandered Britain's credibility”, as she insisted her fiscal plan would “rebuild it”.
“I came into politics because I believed in a government that stands up for working people,” she said.
She blamed Liz Truss’ infamous mini budget on hardship “inflicted on working people over 14 years austerity”, adding it had been “cheered on by the leader of the opposition”.
She later added: “The Tories squandered Britain's credibility. My plan is rebuilding it.”
Analysis: Rachel Reeves' brutal put down of Farage and Reform
13:04 , Maryam Zakir-HussainPolitical editor David Maddox reports:
The chancellor is carrying on the tactic of taking on Reform UK more than the “failed” Tories in this Spring Statement.
She made a joke about “the member for Clacton” (Nigel Farage) not being in the chamber and dismissed Reform as “a Tory tribute act”.
Looking at the Tory defectors now sitting with Reform UK including its Treasury spokesman Robert Jenrick she had an even harsher put down though.
“If you import failed Tory politicians, you get failed Tory policies too", she said to cheers from Labour MPs.
Reeves insists her economic plan is ‘right’ despite OBR slashing growth forecast for 2026
13:02 , Maryam Zakir-HussainRachel Reeves said she had the "right economic plan" for the UK despite the budget watchdog slashing its forecast for growth this year.
The Office for Budget Responsibility 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%.
Updating MPs on the forecasts in her spring statement, against the backdrop of the war in the Middle East, Ms Reeves said: "This 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."
She added: "The new forecasts from the Office for Budget Responsibility confirm that our plan is the right one - inflation is down, borrowing is down, living standards are up and the economy is growing."
OBR economic forecasts 'largely unchanged', says Reeves
12:57 , Maryam Zakir-HussainPolitical writer Athena Stavrou reports:
Rachel Reeves has said the Office for Budget Responsibility’s (OBR) latest economic forecasts have shown the “average growth across the forecast period is largely unchanged”.
The chancellor said the OBR has “adjusted the profile of GDP so that it grows slightly slower in 2026 and faster in 2027 and 2028”.
She added it is predicted to grow by by 1.1 per cent in 2026, 1.6 per cent in 2027 and 2028, and 1.5 per cent in 2029 and 2030.Unemployment is set to peak later this year and then fall in every year of the forecast period, ending the period at 4.1 per cent – lower than it was at the start of the Parliament, MS Reeves also said.
Reeves hits out at ‘failed Tory’ defectors as she defends scrapping of 2-child benefit cap
12:50 , Maryam Zakir-HussainPolitical reporter Athena Stavrou writes:
Rachel Reeves has warned Reform UK that accepting Tory defectors will leave them with “failed Tory policies too”, as she defended the government’s decision to scrap the two-child benefit cap.
Both the Conservative Party and Reform UK have pledged to reinstate the limit if they were to be elected to government.
“The Tories have said that they would reinstate that destructive policy and now Reform the same exactly the same thing,” Ms Reeves said.
“Two parties united in their intention to plunge nearly half a million children back into quality of a single stroke.”
She added: “If you import failed Tory politicians, you get failed Tory policies too.”
Analysis: A Spring Statement aimed at validating the Starmer project
12:49 , Maryam Zakir-HussainPolitical editor David Maddox writes:
There are not expected to be any announcements in the Spring Statement today but it is clear that Rachel Reeves wants to use the occasion to validate what she has done and the trajectory of the embattled government led by Keir Starmer.
With the prime minister still facing an uncertain future after the Gorton and denton by-election and with the local and devolved elections looming on 7 May, the case for economic stability and growth is essential for the survival of both Sir Keir and Ms Reeves.
Ms Reeves was heckled by the benches opposite as she boasted of the best economic growth in the G7 and insisting that the economy is on the right course with “the economy growing, inflation falling and living standards growing.”
It certainly appeared to lift the mood of the benches behind her though with labour MPs desperately wanting some good news.
Reeves criticises two-child benefit cap as 'shameful'
12:48 , Maryam Zakir-HussainCommenting on the “shameful” two-child benefit cap, Rachel Reeves called it a “destructive policy” which used to send “children to school hungry”.
The chancellor called out Reform and the Tories who backed the two-child policy.
She said they are “two parties united in their attention to plunge nearly half a million children back into poverty in a single stroke”.
Chancellor has 'no doubt about Britain's ability to navigate challenges'
12:47 , Maryam Zakir-HussainChancellor Rachel Reeves has said she is in "no doubt about Britain's ability to navigate" challenges, as she defended Labour's performance since the 2024 election.
She told the Commons: "I want to reassure this House that I am in regular contact with the governor of the Bank of England (Andrew Bailey), with my international counterparts and with key affected industries, including our maritime sector, and tomorrow, I will meet with our North Sea industry leaders to discuss the implications that they face and work with them to manage this uncertain period.
"In an increasingly dangerous world, I am proud to be the Chancellor that is delivering the biggest uplift in defence spending since the Cold War, with £650 million committed in January to upgrade our typhoon fighter jets, a new Royal Navy frigate launched from Rosyth last week, and just yesterday, our £1 billion helicopter deal with Leonardo.
"I am in no doubt about Britain's ability to navigate the challenges we face.
"The plan that I have been driving forward since the election is the right one - stability in our public finances, investment in our infrastructure including our Armed Forces, and reform for Britain's economy."
Reeves pledges to protect economy in ‘uncertain’ world
12:43 , Maryam Zakir-HussainPolitical writer Athena Stavrou reports:
Rachel Reeves has promised to protect Britain’s economy in the midst of uncertainty around the globe.
Speaking to MPs during her spring statement, the chancellor said the government’s economic plan is now “even more important in a world that in the last few days has become even more uncertain”.
She said: “It is incumbent on me and on this government to charter course through that uncertainty, to secure our economy against shock and protect families from the turbulence that we see beyond our borders.”
Analysis: Rachel Reeves moves early to provide assurance on defence spending
12:42 , Maryam Zakir-HussainPolitical editor David Maddox writes:
Given the current situation with a new war in the Middle East as Iran lashes out at the UK and other allies, Ms Reeves needed to provide some early assurance.
She has also been facing questions being asked about whether the government is actually spending what it promised to spend on defence.
She boasted of the “biggest uplift in defence spending” since the last government.
Ms Reeves also made it clear she is talking to the North Sea energy sector and finance ministers around the world on how to deal with the Iran crisis.
Her words on defence were met with ironic cheers from the opposition benches because there is real doubt whether she will hit the 3 per cent of GDP spending that Keir Starmer has promised.
UK borrowing costs surge ahead of spring statement
11:53 , Maryam Zakir-HussainUK borrowing costs have surged ahead of the chancellor’s spring statement announcement.
Bond yields, the returns government promise to buyers of their debt, have spiked as concerns grow that Iran will withhold supplies of gas and oil.
Amid surging energy prices, investors are worried that inflation could be triggered, making it hard for the Bank of England to cut interest rates.
The economic situation worsens as Rachel Reeves is less than an hour away from delivering a speech in which will say the financial climate is “stronger and more secure”.
