Perception is important. In a week where the British economy could be seen as second fiddle to the unfolding conflict in the Middle East, the Chancellor insisted that stability would be her watchword.
Earlier this afternoon, in her Spring Statement delivered to the House of Commons, Rachel Reeves defended her economic strategy. While it was not designed to dominate the news cycle, it was an important marker of the government’s economic direction. There were no major tax changes and no new increases in spending. Instead, the statement focused on updated forecasts from the Office for Budget Responsibility (OBR), and a largely unchanged economic outlook.
The Chancellor framed the moment explicitly against a more volatile global backdrop, referencing conflict in Iran and the Middle East and the risks this poses to energy markets and wider economic stability. Her argument was that in a dangerous and predicable world, the UK must “secure our economy against shocks” and protect families from turbulence abroad.
The economic backdrop remains challenging but marginally improved. The OBR expects growth to slow this year before gradually picking up. Real GDP is forecast to grow by 1.1% in 2026, before rising to 1.6% in both 2027 and 2028, and 1.5% in 2029 and 2030. Over the life of this Parliament, GDP per person is expected to rise by 5.6%. The Chancellor highlighted that growth “is for a purpose – to make working people better off,” and the forecast suggests that by the next election people will be around £1,000 a year better off in real terms. At a time when more and more voters are disenfranchised with the main parties, this is the headline the Chancellor wants to resonate with the public.
Inflation is forecast to return to the 2% target in the second half of next year, falling faster than expected in the autumn. The Chancellor linked this directly to measures taken at the Budget, including the £150 reduction in energy bills from next month and other cost-of-living interventions. Unemployment is expected to rise slightly in the near term, peaking at just over 5% in 2026, before falling back to 4.1% by the end of the forecast period. Wage growth is stagnant, but in real terms earnings remain positive, which supports the government’s claim that living standards are gradually improving.
On the public finances, borrowing is forecast to fall significantly compared with the autumn projections. The OBR now expects Public Sector Net Borrowing to decline from 4.3% this year to 3.6 1.8% by 2029–30. Overall borrowing across the forecast is nearly £18 billion lower than expected in the autumn.
So, what does this mean for our key sectors?
Although the Spring Statement did not contain major sector-specific announcements, the economic context set out today has practical implications for our key sectors.
Energy
The Chancellor’s opening focus on global conflict and energy market volatility was not incidental. The government is acutely aware that renewed pressure on oil and gas prices could quickly feed through to inflation and household costs. That makes domestic energy resilience politically and economically important.
A global rise in energy prices, namely gas prices, could negate any progress made on the cost of living, and potentially inflation. In the last 48 hours, UK wholesale gas prices have risen by nearly 100 percent. While this has not yet reached the peak of the last energy shock, it is the largest two day rise since records began in 1991.
A global rise in energy prices, namely gas prices, could negate any progress made on the cost of living, and potentially inflation. In the last 48 hours, UK wholesale gas prices have risen by nearly 100 percent. While this has not yet reached the peak of the last energy shock, it is the largest two day rise since records began in 1991.
The longer the crisis persists, the more today’s forecast could look irrelevant.
Planning and development
The growth outlook is steady but not rapid, and unemployment is forecast to rise in the near term, before improving. That suggests a period of softer demand before conditions strengthen later in the Parliament.
However, interest rate cuts since the election, and expectations of further easing, improve financing conditions compared to last year. The Chancellor highlighted six interest rate cuts since the General Election, describing them as the fastest pace of reductions in 17 years. Lower capital costs matter for both developers and buyers.
Public spending remains constrained overall, which limits the scope for major new grant programmes. However, the government continues to frame affordable housing, planning reform and infrastructure investment as central to creating economic capacity. Schemes that clearly unlock growth, enable housing delivery, and support local economic activity are more likely to align with that agenda. The emphasis will remain firmly on value for money and measurable impact.
Infrastructure
Infrastructure featured heavily in the Chancellor’s speech, particularly in the context of defence investment and wider public investment commitments. She positioned infrastructure as part of an “active and strategic state” building long-term economic security. The OBR assumes productivity growth of around 1% a year in the medium term, which underpins the fiscal situation. If productivity underperforms, borrowing pressures increase significantly. That places a premium on infrastructure that genuinely enhances economic output, improves connectivity, and raises long-term productivity.
A final thought
Today was a non-event fiscally. No new policy was announced, and the OBR’s forecast was largely unchanged. But that forecast is now largely redundant. Events over the weekend have injected a great deal of uncertainty into the global economy, while rapidly increasing energy prices threaten the public finances and the cost of living. The only certainty is that the outlook in the Autumn will be very different.