Chancellor of the Exchequer Rachel Reeves asserts that Labour has ‘restored economic stability’. This is despite downgraded growth forecasts for ’2026 & rising unemployment.
Delivering her spring statement to MPs in the House of Commons on Tuesday, 3 March, Reeves said that the government has ‘the correct economic plan for the country’. She added that she believes that families will feel better off’ by the next election.
Meanwhile, she also announced that economic growth was forecast to slow down in ’26 and cautioned that unemployment was also set to peak late this year at 5.3%.
The US-Israel war with Iran would mean that any narrow improvements in the economy and the Office for Budget Responsibility’s forecasts are likely to be overturned. This coincides with a spike in oil and gas prices, which are expected to result in higher inflation and energy costs.
Reeves addressed the Middle East conflict at the start of her speech, saying that it is incumbent on me and on this government to chart a course through that uncertainty in securing the UK economy against shocks. Also, protect families from the turbulence that is seen beyond the UK’s borders, such as rising costs of living and potential job losses due to the economic impacts of the conflict.
On Tuesday, 3 March, the OBR, in their forecasts, published that the conflict in the Middle East that escalated as their forecast was being prepared was likely to have significant impacts on the global and UK economies.
The spring statement is a chance for the chancellor to update MPs on the state of the economy. This is the Chancellor’s role in responding to independent forecasts from the OBR.
Those forecasts published on Tuesday, 3 March, reflect GDP growth more slowly than expected in 2026. After that, GDP growth increased slightly faster. This is with a 1.1% increase in 2026 and an average increase of 1.6% a year until 2030.
Unemployment is set to peak later this year and fall again every year during the next 4 years until 2030, ending at 4.1%. This is lower than it was at the commencement of Parliament.
