Spring Statement 2026 – Key Points

The Chancellor delivered the Spring Statement on 3 March 2026. The government has been keen to maintain a single major tax event each year – the Autumn Budget – meaning the Spring Statement is intended primarily as an interim update on the economy and public finances.

While the Chancellor honoured the commitment not to introduce major tax announcements, there was still plenty to say about the wider economic outlook.

Looking back a year, the previous Spring Statement focused on increasing defence spending, reducing welfare spending and driving economic growth. Over the past year, many of the proposed welfare cuts failed to gain sufficient support from backbench MPs, and economic growth has remained modest.

So, what did the Chancellor have to say a year on?

The central message was that the government believes its current policies are working. The Chancellor stated that:

“The Spring Forecast has shown that the government’s economic plan to cut the cost of living, cut national debt and grow the economy is the right one.”

Although the speech was highly political, the Chancellor highlighted three areas where the government believes progress is being made.

Cutting the Cost of Living

The Office for Budget Responsibility (OBR) forecast indicates that inflation, borrowing and debt interest payments are falling, while investment is increasing.

Reducing Borrowing

The OBR forecasts that government borrowing has fallen by nearly £18 billion compared with the Autumn forecast. Borrowing this year is expected to be the lowest in six years and below the G7 average.

Growing the Economy

The OBR forecasts that GDP per person will grow more than previously expected at the Autumn Budget, with overall growth of 5.6% forecast over the course of the current Parliament.

What Did the OBR Say?

The Office for Budget Responsibility’s accompanying 125-page report paints a more cautious picture. The report opens by noting that the fiscal outlook ahead of the next Budget remains challenging – suggesting that tax cuts may not be on the horizon any time soon.

The OBR summarised several key economic forecasts:

• Productivity growth is expected to rise to around 1% in the medium term.
• Labour supply growth will decline, largely due to lower net migration and an ageing population.
• GDP growth is forecast to slow to 1.1% in 2026 before averaging 1.6% over the remainder of the five-year forecast period.
• Inflation is expected to reach the Bank of England’s 2% target by late 2026.
• Public sector net borrowing is projected to fall from 5.2% of GDP in 2024/25 to 4.3% this year, and then to 1.6% by 2030/31.
• Weekly wage growth is forecast to slow to around 3.5% in 2026 before averaging approximately 2.25% thereafter.
• Unemployment is expected to rise from 4.75% in 2025 to a peak of 5.33% in 2026, primarily due to new entrants to the labour market struggling to find work.

Additional OBR Observations

The OBR also highlighted a number of longer-term fiscal pressures:

• The tax-to-GDP ratio is forecast to rise to a post-war high of 38% by 2030/31.
• There are continuing pressures on departmental spending plans.
• Future welfare spending could increase significantly, particularly due to the sharp rise in disability and health-related claims since the pandemic.

It is important to note that the Spring Forecast is based on current information. For example, the potential economic impact of the evolving situation in the Middle East has not been factored into the OBR’s projections.

Summary

Overall, the outlook suggests that economic growth will remain modest in the near term, with ongoing pressure on public finances and limited scope for tax cuts in the immediate future.

If you want to know more about forthcoming tax changes please reach out to us for a more in-depth document. imagine@hurst.co.uk