Spring Statement overview: Main highlights

Spring Statement Highlights: Key Economic Updates

During her Spring Statement to Parliament, Rachel Reeves acknowledged that the pace of economic growth is expected to decelerate this year, with unemployment reaching its highest point before gradually improving.

Main Forecasts and Announcements

Economic Growth

• Growth is projected to slow from 1.4% this year to 1.1%, largely due to reduced migration.
• The Office for Budget Responsibility (OBR) anticipates growth rates of 1.6% in both 2027 and 2028, followed by 1.5% in 2029 and 2030.
• GDP per person is set to rise by 5.6% over the course of this parliamentary term.
• Real disposable income, which reflects living standards, is forecast to increase by less than 0.25% in 2025-26.

Employment Outlook

• The unemployment rate is expected to reach a peak of 5.3% later this year, affecting approximately 1.9 million individuals.
• From that point, unemployment is predicted to decline each year, reaching 4.1% by 2029.

Government Borrowing

• Borrowing by the government is now estimated to be £18 billion less than previously projected last autumn.
• The OBR forecasts public sector net borrowing as follows:
  • 4.3% in 2026
  • 3.6% in 2027
  • 2.9% in 2028
  • 2.5% in 2029
  • 1.8% by 2030

Taxation

• The UK's already high tax burden is expected to increase more rapidly than previously anticipated.
• By the start of the next decade, tax revenues are projected to account for 38.5% of GDP.

National Debt

• Debt levels are now forecast to be lower each year compared to earlier predictions.
• Interest payments on debt are set to be £3 billion less by 2029.
• This year, the Treasury will pay £109.7 billion in interest, with the annual cost rising to £137.1 billion by 2030-31.

Migration Trends

• The OBR has revised its central migration estimate downward by 60,000 people annually, resulting in a projected adult population for 2030 that is 200,000 lower than previously expected.
• Net migration is now anticipated to average 235,000 per year over the forecast period, down from an earlier estimate of 295,000.

Energy Sector

• The OBR expects wholesale gas prices to drop by 15% and oil prices to decrease by 3% over the next five years.
• The Chancellor plans to meet with North Sea industry leaders to discuss the challenges facing the oil and gas sector, particularly in light of the ongoing Iran crisis.
• This year, government support will help reduce energy bills, including a £150 cut to household bills in April.