The UK chancellor, Rachel Reeves, delivered her Sprin Forecast 2026 speech yesterday 3rd of March.
UK Spring Forecast 2026 – Executive Brief
Economic Context
- Global uncertainty: conflicts in Iran and the Middle East; potential energy price shocks.
- Government focus: stability, protection for families, and national security.
- Defence spending: largest since the Cold War. Key commitments:
- £650m Typhoon fighter upgrade
- New Royal Navy frigate launched
- £1bn helicopter deal with Leonardo
Fiscal Policy & Public Finances
- Single major fiscal event per year for predictability.
-
Public Sector Net Borrowing (PSNB) forecast to fall:
- 2026: 3.6%
- 2027: 2.9%
- 2028: 2.5%
- 2029–30: 1.8%
- Debt lower in all years compared with previous forecasts.
- Increased headroom under fiscal rules: Stability (£23.6bn) and Investment (£27.1bn).
Inflation, Interest Rates & Cost of Living
- Six interest rate cuts since election (fastest in 17 years).
- Inflation falling faster than Autumn 2025 forecasts.
- Typical household savings:
- £1,300/year on new fixed-rate mortgage
- £150 off energy bills per month
- 5p fuel duty cut extended
- Prescription charges frozen for 2nd year
- Rail fares frozen for first time in 30 years
Economic Growth & Employment
- GDP growth forecast:
- 2026: 1.1%
- 2027–28: 1.6%
- 2029–30: 1.5%
- Average per capita growth over the course of current Parliament: 5.6%
- Unemployment forecast to peak in 2026, then fall to 4.1% by 2030
Social & Infrastructure Investment
- Reduction in child poverty – largest since records began.
- Key measures:
- 30 hours free childcare for working families
- Free breakfast clubs at primary schools
- Scrapping the two-child benefit limit
- Investment in public services:
- NHS: record cash settlement, reduced waiting lists
- Schools: fixing crumbling classrooms
- Infrastructure: urban, rural, and coastal community development
Business & Trade Support
- Support measures:
- Business energy cost discounts
- Trade deals: India, US, EU
- Reforms to back entrepreneurs and innovation
- Skills funding and planning reforms
- Focus on AI, innovation, and regional opportunity
Strategic Vision
- Inclusive growth: reject trickle-down economics.
- Strengthen global trade relationships.
- Spread opportunity across the UK, transform economic geography.
- Avoid austerity and reckless borrowing.
Key Takeaways
- Stability achieved: inflation and interest rates falling, borrowing reduced.
- Growth inclusive: living standards rising, per capita GDP +5.6% over Parliament.
- Social impact: reduced child poverty, improved NHS and schools.
- Fiscal credibility: more headroom for public investment and working families.
- Outlook: policies expected to continue delivering economic resilience despite global uncertainty.
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