Rachel Reeves's Spring Statement – live analysis and commentary

And that's it, we're going to end our coverage here for today. But keep a close eye on MoneyWeek.com over the coming days as we bring you more analysis from today and what it means for you.

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OBR: Welfare spending set to rise to £407 billion by 2031

The OBR’s economic and fiscal outlook report says welfare spending is forecast to rise this year by £18 billion (5.8%) to £333 billion.

It is then forecast to increase, not adjusted for inflation, by an average of £15 billion a year over the next five years, reaching £407 billion in 2031.

Labour’s economic plan is working, says Starmer

The prime minister showed his support for Rachel Reeves’s Spring Statement, writing on his Substack that we are “at a turning point in our economic plan.”

Starmer declared: “Inflation is down, energy bills and borrowing costs have fallen, productivity and business confidence is rising.

“This has all happened because of decisions, Labour decisions, that we have made. Always with the interests of working people in our minds-eye.”

The PM also reiterated much of what the chancellor said during the statement, saying Labour have “rejected austerity” and are doing all they can to drive down the cost of living.

“I know there is more to do. But our economic plan is working,” he added.

UK employment prediction could be ‘too optimistic’

Dan Coatsworth, head of markets at investment platform AJ Bell, said events in the Middle East could mean forecasts on the UK’s rate of unemployment are too positive.

He said higher inflation caused by the conflict, meaning falling interest rates are less likely, could breed negative sentiment among consumers and businesses.

This could mean the OBR’s economic forecasts on growth could be too high.

“That situation might also mean Reeves’ prediction that UK employment is ‘set to peak later this year’ is also too optimistic,” Coatsworth added.

UK’s economic woes demand bolder and swifter action, says Resolution Foundation

Following the Spring Statement, the Resolution Foundation, a left-leaning think tank, has said the chancellor must be bolder and enact swifter policy after it said the OBR’s forecasts are already out of date.

The think tank claimed the new conflict in the Middle East that emerged on 28 February after the US and Israel struck Iran has meant the OBR’s inflation and interest rates forecasts, which were finalised before the conflict started, are not up to date.

A new continued war between the US and Iran could lead to spikes in the price of energy and a renewed inflationary risk to the UK economy, exacerbating the cost of living crisis.

Analysis by the think tank says, if sustained, the sharp rise in oil and gas prices in the wake of the strikes could add over £500 to the typical household energy bill in the summer and roughly a percentage point to inflation.

As such, the Resolution Foundation said that while there is merit in having a low-key Spring Statement, policy action cannot wait until the Autumn Budget.

Ruth Curtice, chief executive of the Resolution Foundation, said: “The Chancellor may have succeeded in delivering a statement free from news today, but with growth weak, unemployment rising, and the risk of further energy price shocks, the UK’s economic woes demand bolder and swifter action.

Curtice highlighted the prospect of higher unemployment as being “particularly concerning” and urged the chancellor to tackle the problem head on and expand the ‘Jobs Guarantee’ to help get people back into work.

She added: “The best news from today’s Spring Forecast was an outlook for lower inflation and interest rates, but sadly both already look out of date before the ink is dry on the OBR forecast.

“The absence of policy decisions today can’t hide the fact that tough decisions lie ahead. Events in the Middle East have made support for families struggling with the cost of living more urgent. Looking further ahead, the Government still faces the prospect of going into the next election with major tax rises and a fresh squeeze on public services funding.”

IFS: Be glad no new policy was announced at Statement

Helen Miller, director of the Institute for Fiscal Studies think tank, said today’s Spring Statement did exactly what it said on the tin, addressing the OBR’s updated economic forecasts and not much more.

She said: “There was blissfully little speculation about potential policy changes in the lead up, and no tweaking tax or spending policies on the day. To her credit, she stayed her hand. One major fiscal event per year is enough.

“The OBR’s forecast for borrowing improved ever so slightly, driven by strong tax receipts, which were more than enough to offset the cost of various policy announcements and reversals since the autumn."

Miller praised the chancellor for not making rash policy decisions in response to the conflict in the Middle East.

She said: “The all-important context is that ongoing events in the Middle East, and the sharp market movements they have induced, have already upended some of the assumptions underpinning this forecast. This is yet another reason to be glad that the Chancellor steered clear of making policy announcements in response."

OBR: House price growth set to remain steady

The OBR is forecasting house prices to grow by between 2.4% and 2.9% each year between 2026 and 2030, broadly in line with rises in average incomes.

Meanwhile, it predicts interest rates on mortgages to rise from 4.1% in 2026 to 4.5% on average each year from 2027 to 2030.

OBR: One million extra state pensioners to be paying income tax by 2031

The OBR’s economic and fiscal outlook report states an additional one million pensioners will be drawn into paying income tax by 2031 due to a frozen personal allowance and rising state pension, under the triple lock mechanism.

Reeves has previously said the government won’t tax pensioners whose only income comes from a state pension, but HM Treasury is yet to confirm how this exemption will apply.

Capital Gains Tax to bring in £34.9 billion by end of parliament

The latest OBR forecasts show receipts from Capital Gains Tax (CGT) are expected to rise across the forecast period (until 2030).

The rise comes mainly due to projected rises in equity prices, and changes to the inheritance and capital gains tax regimes largely announced in the Budget in October 2024.

Expected CGT receipts in every year are higher now than they were in the OBR’s November forecast.

The OBR expected £29.8 billion to be raised from CGT in 2030/31 in November. They now expect £34.9 billion.

The November forecasts now show the OBR expects CGT to raise £21.8 billion in 2025/26, £20.8 billion in 2026/27, £25.5 billion in 2028/29, £32 in 2029/30, and £34.9 billion in 2030/31.

Impact of inheritance tax reforms revealed

The Office for Budget Responsibility has forecast the impact of impending inheritance tax reforms that will see agricultural and business property relief curbed from April 2026 and pensions included in estate calculations from April 2027.

The OBR said changes to the inheritance tax regime announced since the October 2024 Budget, including taxing inherited pension pots and introducing changes to agricultural and business property reliefs, will account for around 14% of total inheritance tax receipts by the end of the forecast in 2030/31.

It said: "The behavioural responses to these measures and the tax base for inheritable pension wealth are particularly uncertain, adding further uncertainty to the forecast."

Unemployment expected to peak at 5.3% in 2026

The OBR’s forecast anticipates that UK unemployment will rise to just over 5.3% this year, a third of a percentage point more than expected in its November projection.

The fiscal watchdog says it expects weak labour market demand to continue in the near term.

After peaking in 2026, the OBR believes unemployment will fall gradually to an estimated equilibrium level of 4.1% by 2030.

OBR: ‘Key’ risks to the economy forecast due to Iran conflict

In its economic and fiscal outlook report, the OBR says “key” risks remain to its forecasts following the conflict in Iran.

Conflict in the Middle East could have “significant impacts on the global economy, particularly energy markets”, the document reads.

The report also says the OBR made its forecasts prior to tariffs imposed by US President Donald Trump last week, which has caused ripples in the markets since.

OBR: Chancellor’s fiscal headroom now higher than in Budget

Rachel Reeves’s fiscal headroom, the financial buffer the Treasury has against unexpected shocks, is forecast to be higher now than the OBR expected at the Autumn Budget.

Following the Spring Statement, the OBR now expects fiscal headroom to be £23.6 billion by the end of the forecast period (2029/30).

This is £1.9 billion more than was expected in the OBR’s November forecast (£21.7 billion).

If this forecast is correct, headroom of £23.6 billion means Rachel Reeves will have the highest amount of headroom since November 2022.

Spring Statement ‘provides little relief to people across the UK’

While Reeves insists the Labour government’s plan “is the right one”, is it enough to convince members of the public? Kevin Mountford, personal finance expert and co-founder at Raisin UK, said: “This provides little relief to people across the UK.

“The economy remains fragile, inflation is still above the Bank of England’s target, people are continuing to contend with cost of living pressures, and we’ve also seen the highest unemployment rate since 2021.”

Some 60% of people dipped into their savings to cover their outgoings last year, including 20% who did so to pay day-to-day bills, according to Raisin’s Great British Savings Report.

“While many lack the buffer to absorb these pressures, approaching the end of the tax year is a critical time to review finances, use available allowances, and make sure savings are earning competitive returns,” Mountford said. “Small steps can make a big difference.”

We look at how much you should have in emergency savings in a separate piece.

OBR publishes economic and fiscal outlook

The OBR has published its economic and fiscal outlook for the UK economy following the chancellor's speech. We'll bring you the main takeaways from the document.

Shadow chancellor: “Is that it?”

Rachel Reeves has finished delivering the Spring Statement.

Conservative shadow chancellor, Mel Stride, opened his response with a sentiment many listeners will have been thinking: “Is that it?”

He lambasted Reeves for having “no clear economic plan”, saying as the economy “bleeds out”, the chancellor comes to the House of Commons with “nothing to say and with no plan”.

Stride further criticised the chancellor for raising taxes and “destroying growth” with her fiscal policy.

OBR: Inflation to fall faster than November projection

The chancellor says the OBR’s new forecasts will show that inflation will fall faster in 2026 than it had previously expected.

She takes credit for this, saying her reforms in the Budget are helping disinflation in the UK.

In particular, analysts say the policy of removing green levies from household energy bills is the largest contributor to disinflation. The government says it will save the average household £150 a year from April.

Reeves: Public sector net borrowing to fall to 1.8% by 2030

The OBR’s forecasts say the government is set to reduce public sector net borrowing from 4.3% this year to 3.6% in 2027, then to 2.9% in 2028, 2.5% in 2029 and 1.8% in 2030, Reeves says.

She adds that this year the government is set to borrow less than the G7 average, something she says the former Conservative government “never achieved”.

Unemployment to peak in 2026, but fall thereafter

Unemployment has been a major bugbear for the chancellor in recent months, with UK joblessness rising to a five year high.

However, the chancellor says the OBR’s forecast shows unemployment is set to fall soon.

Reeves says the OBR expects unemployment to peak later this year, but is then set to fall in every year of the forecast period.

Joblessness will then end the forecast period at 4.1%. She adds that this would be lower than it was at the start of this parliament in 2025.

Reeves: Brits to be £1,000 better off a year in real terms by next election

The chancellor says the OBR now anticipates that by the next election, due in 2029, the average Brit will be around £1,000 better off a year. This number, she says, is adjusted for inflation.

She adds: “The economy is growing, living standards are rising, and inflation has fallen. But I'm not satisfied yet with these forecasts."

OBR updates forecasts for UK economic growth

Reeves says the OBR has updated its growth forecasts for the UK economy, stating it will be slower in 2026 than previously predicted then faster than previously predicted in 2027.

It is forecasting GDP to grow by 1.1% in 2026, 1.6% in both 2027 and 2028 and 1.5% in 2029 and 2030. In total GDP will grow by 5.6% over the course of this parliament, Reeves says.

Reeves: OBR forecasts show 'our plan is the right one'

The chancellor says the Office for Budget Responsibility’s (OBR) new forecast shows that Labour’s plan for the economy is “the right one.”

She says her fiscal policy has led to inflation and borrowing falling while living standards and economic growth are up.

Reeves reiterated that her ambition is for just one large fiscal event a year, limiting major policy changes to the Autumn Budget.

The chancellor has just begun delivering her Spring Statement. We will be reporting on the statement here, as it happens.

Spring Statement coming up shortly

We're expecting to hear from the chancellor in around five minutes.

How is the UK economy doing?

The Spring Statement is an update on the state of the UK economy and public finances, but how are both of these actually faring?

How you judge this depends on what macroeconomic measure you’re looking at, be that inflation, Gross Domestic Product (GDP), unemployment or something else.

The Consumer Price Index (CPI) measure of inflation has slowed from record highs in 2022 and currently sits at 3%, according to the latest data from the Office for National Statistics (ONS). But it is still above the government’s 2% target which the Bank of England (BoE) has to meet.

Meanwhile, the latest figures show GDP grew by just 0.1% in the final three months of 2025, and 1.3% across the whole of 2025, although this was better than the 1.1% GDP growth recorded in 2024.

Unemployment hit a five-year high in January while unemployment among 16 to 24-year-olds rose to 16.1% in the final quarter of 2025, the highest level in a decade.

However, wages continue to grow, with annual growth in weekly earnings between October and December 2025, excluding bonuses, rising by 4.2% and above inflation.

The government also recorded a £30.4 billion budget surplus in January, aided by an increase in tax receipts. The ONS said this was £15.9 billion more than in January 2025 and the highest surplus (when not adjusted for inflation) since monthly records began in 1993.

Mortgage lenders cut rates ahead of Spring Statement – should you overpay?

A host of major lenders including Barclays, Nationwide and NatWest have cut mortgage rates ahead of the Spring Statement.

Jinesh Vohra, chief executive officer of mortgage app Sprive, said now could be the time for those on variable rate and cheaper fixed-rate deals to use the extra money to overpay on their mortgage and reduce the amount they’re paying in interest.

Do note, this is based on predictions the Bank of England (BoE) base rate will drop which would feed into mortgage costs, but whether rates will come down in the future is now less certain following the conflict in Iran.

If the conflict causes inflation to rise across the globe, it could make central banks more cautious, including the BoE, and less likely to lower rates.

What could the impact of the Iran conflict be on the Spring Statement?

It is not clear whether Reeves will directly address the conflict in Iran during her statement today, which could prove inflationary.

That said, many experts are saying the tensions are in too early a stage to know exactly what the future effects will be.

What the conflict could mean for the Spring Statement is that the economic forecasts put forward by the Office for Budget Responsibility (OBR) don't account for the Iran conflict, meaning they are making predictions based on a different world today.

The OBR usually publishes its final forecasts five days before the Spring Statement or Budget, after which the Treasury can fine tune any measures which might affect the economy.

Reeves expected to focus on stability amid ‘uncertain’ world

The chancellor’s address to the House of Commons today comes amid major tensions in the Middle East after a joint attack on Iran by Israel and the US.

In response, Iran has launched retaliatory strikes with missiles hitting Israel as well as a host of gulf countries including Kuwait, the United Arab Emirates (UAE) and Bahrain.

In the midst of the conflict, which has caused oil prices to surge, the chancellor is expected to drive home the message that the government’s focus on stability will contribute to a “stronger and more secure economy”.

The chancellor is expected to say: “This government has the right economic plan for our country…in a world that has become yet more uncertain.

“Stability in the public finances, investment in infrastructure and reform to our economy.

“Building growth not on the contribution of a few people or a few parts of the country, but in every part of Britain with a state that doesn’t stand back, but steps up."

Hello, good morning and welcome back to our live coverage of the Spring Statement, which is taking place at around 12.30pm today. Stay with us as we bring you analysis and commentary on what any announcements mean for you.

That ends our coverage for today, but make sure you join us again tomorrow when we'll bring you live coverage of the Spring Statement, plus more analysis and expert commentary.

Could ‘boring’ Spring Statement be what’s needed for the pension sector?

Plenty of changes are on the way for the pension sector, such as pensions being included in the scope of inheritance tax from April 2027 and a reduction in salary sacrifice National Insurance savings from 2029.

This comes as the seismic Pension Schemes Bill makes its way through the House of Lords.

With all this considered, pension savers will be hoping for a “boring sequence of fiscal events” this year, including the Spring Statement, said Jamie Jenkins, director of policy at retirement firm Royal London.

“Given the recent history of fiscal events, one can easily get excited at the prospect of boredom,” Jenkins said.

What is the Spring Statement?

The Office for Budget Responsibility (OBR) is required to make two sets of economic forecasts each year which outline their projections for the economy, based on the government’s fiscal policy.

The most significant of these is published alongside the Autumn Budget, the most important fiscal event of the year where most governments outline their economic policy.

The other forecast is usually published in the spring. The chancellor usually makes a statement to the House of Commons addressing these projections, hence the name “Spring Statement”.

The Spring Statement is not necessarily an event where new fiscal policy is announced, but previous chancellors have used the statement to outline new economic plans to meet OBR forecasts.

For example Rachel Reeves used the Spring Statement to announce cuts to welfare in her 2025 statement.

When is the Spring Statement?

The chancellor will deliver the Spring Statement in the House of Commons at around 12:30pm tomorrow (3 March).

The 2025 Spring Statement lasted around 30 minutes, and this year’s statement is expected to take around the same amount of time.

The Office for Budget Responsibility (OBR), the UK’s fiscal watchdog, will also publish updated economic forecasts alongside the Spring Statement. We expect these to be released at around 2:30pm.

Will anything major be announced during the Spring Statement?

Rachel Reeves isn’t expected to make any major policy announcements as her preference is to do this just once a year at the Budget.

However, the chancellor did confirm some big changes to the benefits system in the 2025 Spring Statement, although some of these were reversed later in the year.

Good afternoon and welcome to MoneyWeek’s Spring Statement live report. Chancellor Rachel Reeves is set to deliver the statement to the House of Commons tomorrow (3 March). We will be covering all the major announcements as they happen, as well as bringing you reaction and analysis.