London, March 3, 2026 — Chancellor Rachel Reeves delivered her Spring Statement today in a notably low-key presentation that avoided the usual flash of major tax cuts or spending announcements. The statement came as the Office for Budget Responsibility (OBR) released its latest economic forecasts, painting a sobering picture of Britain's financial outlook.
Economic Forecasts Downgraded
The most significant development in Reeves' presentation was the downgrading of this year's growth forecast to 1.1%, from 1.4% at the time of last autumn's Budget. The OBR now predicts a modest recovery with 1.6% growth expected in both 2027 and 2028, though this represents only a marginal improvement over the previous year's projection.
Unemployment is forecast to rise to 5.3% this year before gradually declining to 4.1% by 2030. Inflation remains at an average of 2.3% for the current year, with the government targeting a return to its 2% goal in 2027.
"The war in the Middle East has made our economic outlook yet more uncertain," Reeves conceded during her presentation.
No Major Tax or Spending Measures
In contrast to typical Spring Statements that often include significant fiscal announcements, this edition notably contained no major tax reductions or spending increases. The government instead focused on monitoring existing policies and adjusting them based on the evolving economic landscape.
Reeves acknowledged a change she made last year regarding how the OBR assesses whether she is meeting her tax and spending rules — the Office will now wait for the Budget before making such assessments, providing more flexibility in fiscal planning.
Housing Market Challenges
The housing sector faces continued headwinds. Average mortgage interest rates are predicted to rise from 4.1% this year to 4.5% by 2030. Housebuilding activity is expected to decline from an average of 260,000 homes per year in the early 2020s to just 220,000 in 2026/27 before recovering to 305,000 by 2030/31.
Migration and Immigration
Net migration is forecast to decrease significantly, with predictions showing a reduction of 60,000 compared to November's forecasts. Overall net migration is expected to fluctuate between 200,000 and 300,000 annually over the coming decade.
Reeves also noted that more British nationals are estimated to be leaving the UK, contributing to the downward revision in migration figures.
Budget U-Turns
The statement revealed several policy adjustments from previous announcements. The government announced a further modification to plans for taxing inherited farmland, which will result in £100 million less revenue annually than originally planned. Additionally, the softening of business rates for pubs and music venues in England is expected to cost an extra £100 million per year.
Reeves stated that the Treasury remains exploring "different options" to assist households most vulnerable to soaring energy costs, particularly in light of ongoing Middle East tensions affecting fuel prices.