Read an overview of the key insights and takeaways from the Spring Forecast (statement).
On Tuesday 3 March, Rachel Reeves delivered the Spring Forecast. Although it didn’t introduce new policy changes, it offered a picture of the UK’s economic position, showing the effect of the last budget. We’ve summarised the key points in this blog.
The transition from a ‘Spring Statement’ to a ‘Spring Forecast’ is because the UK Government is focused on holding just one major event in the autumn, therefore the Spring Forecast is less about new tax or spending policies, but more of a financial check-in.
Spring Forecast overview
The UK Government announced that their economic plan ‘to cut the cost of living, cut national debt and grow the economy, is the right one’ to change Britain for the better. However, a key point of caution for our supporters: these economic forecasts were prepared just before the recent crisis in the Middle East.
The cost of living
The Chancellor’s latest forecasts suggest a brighter outlook for household finances, with the average person expected to be over £1,000 a year better off by the next election, after accounting for inflation.
In her speech, Rachel Reeves emphasised that economic stability should mean that families have enough money to cover more than just their basic bills and mortgages, but also be able to enjoy a holiday.
A key part of this support is the £150 reduction in energy bills starting this April, which the Chancellor described as a vital step in easing the immediate pressure on family incomes and the cost of living.
Mortgages
The Spring Forecast highlighted that the faster pace of interest rate cuts is providing tangible help and relief for homeowners. According to Reeves, these cuts will save families over £1,300 a year on a typical new fixed-rate mortgage, helping to lower one of the biggest cost of living hurdles for households across the UK.
Unemployment and wages
Reeves said that real wages have risen more since the July 2024 election than they did during the first thirteen years of the previous Government. However in terms of unemployment, the OBR increased the forecast, with an expected peak of 5.3% this year, and then a fall to 4.1% by 2030. This means that for jobseekers, things may get worse before they get better.
Worried about how the Spring Forecast might impact you?
Explore free job clubs in your local areaInflation
New forecasts from the OBR show inflation is on a downward path, expected to reduce to 2.3% this year and hit the 2% target by 2027. Lower inflation rates can be welcome for some, such as those managing a tight budget, as it reduces the volatility of everyday costs.
The Chancellor highlighted that ‘inflation is down, borrowing is down, living standards are up and the economy is growing,’ marking a significant shift from the 11% inflation peak seen previously.
