Chancellor Rachel Reeves has delivered her 2026 Spring Statement, an update about the state of the UK economy and new Office of Budget Responsibility forecasts.
Here are the key points and reaction from experts.
Economic growth forecasts
In its economic and fiscal outlook the Office of Budget Responsibility (OBR) has downgraded its economic growth forecast for 2026 from 1.4% to 1.1%. After that, the forecasts are faster:
2026: 1.1%
2027: 1.6%
2028: 1.6%
2029: 1.5%
2030: 1.5%
Unemployment
The OBR forecasts that unemployment will rise to a peak of 5.3% in 2026. It reached a five year high of 5.2% in the three months to December 2025.
After the peak, the OBR said unemployment will fall every year until 2030.
Reeves acknowledged that unemployment among young people is a particular problem, but said the government “won’t leave an entire generation of young people behind”.
In the three months to December 2025, the unemployment rate for young people aged 18-24 was 14%, the highest since 2020.
Inflation
The OBR forecats inflation will fall from 3.4% in 2025 to 2.3% in 2026 and 2.0%, the Bank of England’s target, from 2027 onwards.
Impact of Middle East conflict on the UK economy
All of the OBR’s forecasts do not take into account the impact of a rise in energy prices as a result of the conflict in the Middle East.
In its report, the OBR says: “Conflict in the Middle East, which escalated as we were finalising this document, could have very significant impacts on the global and UK economies”.
Spring Statement 2026: Reaction from experts and entrepreneurs
Derek Ryan, CEO of North West Europe, Bibby Financial Services:
“The chancellor’s Spring Statement is unlikely to shift the dial for SMEs that were hoping for fresh measures to unlock growth. With 46% of firms delaying major investment decisions until after today’s announcement, this was an important moment to unlock pent-up investment – even if the government’s focus for today is on stability, rather than new fiscal intervention.
“Many small business leaders will still be grappling with the high costs of doing business and the elevated tax burden, both of which continue to weigh on hiring and investment decisions. Today’s absence of targeted SME measures may mean that uncertainty lingers, doing very little for business confidence.
“SMEs won’t have expected a silver bullet from today, but they do need a clear and consistent strategy that supports investment, improves access to finance and eases the pressures that constrain growth. Stability is welcome – but without visible momentum behind small business growth, SME confidence risks remaining stuck in neutral at a time when the UK economy needs it in gear.”
Theresa Lindsay, chief marketing officer, Novuna Finance:
“Although we weren’t expecting any sweeping reforms, today’s Spring Statement still fell short of setting a clear strategy to relieve the pressures facing businesses and households. With oil prices spiking this week, motorists need reassurance that the fuel duty discount will stay. For households, the falling energy price cap sounds positive, but knocking around £10 a month off a typical bill is hardly transformative. If the government wants to deliver real relief, it should go further and tackle the levies on energy bills that are still squeezing households.
“Businesses are under pressure too, with higher employer National Insurance acting as a handbrake on hiring and investment, just as unemployment hits its highest level since 2021. The focus should now be on making recruitment more affordable for business owners. Extending business rates relief to the wider hospitality, retail and leisure sectors would also give these businesses the boost they need. The Chancellor’s growth speech later this month is a chance to address some of these issues and deliver the solutions missing today.”
Benjamin Craig, associate director, Ayming UK:
“Growth comes from stability. That’s what businesses have been asking for time and again, and until they genuinely feel they have it, they’ll keep pushing for it.
“What firms need most is the confidence to plan properly. They need to know that the framework in place today will still apply in two, three or four years’ time. Investment decisions aren’t short term. They take years to deliver results, and if there’s a lingering concern that policy might shift, businesses will naturally hold back.
“There’s also a broader perception issue. The government has appeared distracted by infighting, and whether that’s fair or not, perception shapes confidence. Even strong ideas, like those in last year’s Industrial Strategy, lose impact if businesses aren’t convinced there’s a clear and credible plan behind them. The priority now should be to provide consistency and give businesses the stable environment they need to scale and innovate.”
