Low-key Spring Statement still poses risks for Rachel Reeves
Just under a week from now the Chancellor will stand up and deliver the Spring Statement. We aren’t expecting any fireworks, not least because Rachel Reeves has made it clear that she only wants to preside over one major fiscal event a year, and that’s the Autumn Budget.
Nevertheless, next Wednesday still has the potential to whip up a storm and set the political and financial narrative for the rest of the year. Unveiling her 2025 Spring Statement, Reeves declared it would “kickstart economic growth” and bring about a “new era of national renewal.” It’s fair to ask, 12 months on, how’s that working out? Answer: not at all well.
Unemployment has risen steadily but relentlessly; GDP growth peaked before last year’s Spring Statement (0.7 per cent in Q1) before slumping to 0.3 and then flatlining for the final two quarters at 0.1 per cent; and inflation – which had cooled to 2.6 per cent in March 2025 spiked to 3.5 per cent the following month, levelling off at 3.8 per cent for most of the year before, finally, easing in recent months.
Not much renewal to speak of in all that, and the only thing the Chancellor kickstarted was another wasted year; a year capped off with the most damaging and chaotic Budget process since Liz Truss had a go.
Reeves will try hard to find the good news
That drawn-out omnishambles is the reason why the Treasury is so keen on a low key Spring Statement, but while the expectation is that no new tax and spending measures will be announced, we’ll get an update from the OBR on key economic indicators and forecasts as well as its assessment of the UK’s fiscal position. They won’t formally score the government against its fiscal rules but they’ll show enough of their workings for economists and analysts to draw conclusions about the size of the Chancellor’s headroom and it’s this measure that has the potential to make waves.
If, as expected, the headroom rises there will be pressure from Labour MPs to ‘spend the savings’ whereas shrinking headroom would reignite concerns over further tax rises in the Autumn. With remarkably little leaking or briefing, the only thing we know for sure is that Reeves will stretch every sinew to present a narrative of improving economic circumstances, and while some of the numbers will be in her favour they won’t be enough to alter the fact that growth – the government’s “driving mission” remains elusive.