FGF’s Spring Statement response
By Dan Corry, FGF Chief Economist
Rachel Reeves today lived up to her promise to make the Spring Statement a low key affair - indeed it was the shortest Chancellor’s statement this decade. Given all the uncertainty and rumours in the run up to recent fiscal events, that is surely a good thing. At FGF we believe one big fiscal event a year makes sense; two just causes unhelpful speculation.
So the main event was the new forecasts from the Office for Budget Responsibility (OBR). Given the last of these were only made a few months ago it was unsurprising that they did not change that much. Forecast growth was a bit weaker in the short term at 1.1% for 2026 - but stronger in the medium-term, and inflation was better than previously expected.
This, combined with lower than anticipated borrowing and so an increase to the ‘headroom’ against the Chancellor’s fiscal rules should mean that there is nothing to spook the City (though by the same token, little to excite the general population). Reeves emphasised her aim of bringing stability as an essential condition for economic growth.
But she also promised a major speech in two weeks time, in the 2026 Mais Lecture, where she committed to addressing some of the key issues affecting our economy, and that will be much more significant from a policy perspective. Those she mentioned were:
How we can back innovation and the power of AI - something FGF covered last year in our report ‘Rebuilding the Nation 05: Spurring innovation’.
Transforming our economic geography - covered for FGF in Alex Bevan’s ‘Impactful Devolution 03: A toolkit for regional growth and industrial strategy’ report and my FGF piece on ‘The Green Book and getting more investment into the regions’.
Strengthening our global relationships.
Tackling each of these issues will be vital to the long-term growth of our economy, but none lend themselves to easy solutions at the best of times - and these are far from the best of times. The UK economy faces headwinds both domestic and international. On the former, the Chancellor spoke today about the worrying numbers of people not in education, employment or training, a longstanding and growing issue on which we expect to hear more of from the government, not least on the back of the forthcoming Alan Milburn review.
Globally, the last few days have seen even more instability - none of which was reflected in today’s OBR forecasts, and where what happens next and its implications for both national and economic security and prosperity is incredibly hard to predict.
In that febrile context, an economic intervention from the Chancellor, both pitched and delivered as calm and sensible, is no mean feat, and to be welcomed. But there are major challenges ahead - some within Rachel Reeves’ control; many beyond it - and an awful lot can change between now, and the next much bigger fiscal event in the autumn.