Rachel Reeves will make her spring statement on March 3, just over three months after her November budget. It is expected to be a low-key budget event, focused more on forecasts than new policy announcements.
Unlike the fall budget, the spring statement is not expected to include any tax hikes or major spending cuts. Reeves has promised to limit significant fiscal changes to a single annual event, giving himself £21.7 billion of headroom in November to avoid having to return with further measures before the autumn.
Still, the update will be closely watched as the Office for Budget Responsibility releases revised forecasts for growth, borrowing and public finances.
Although the OBR will no longer formally assess performance under budget rules twice a year, economists will review its forecasts to see whether the government remains on track.
Some analysts expect Reeves’ financial headroom to increase slightly to around £24 billion. A decline in this buffer could reignite speculation about future tax increases, particularly if weaker growth or higher borrowing squeezes the margin. Conversely, a significant increase in the margin could increase pressure within the Labor Party to relax spending plans.
Ruth Gregory of Capital Economics warned that the statement could become “another flashpoint” as fiscal space tightens. James Smith of the Resolution Foundation said the government must not allow economic policy to stall until the autumn and argued more needed to be done to tackle sluggish growth and rising unemployment.
No tax increases – for now
No new tax measures are expected in March, but the debate over fiscal strategy is likely to intensify. The Institute for Fiscal Studies has argued that frequent adjustments based on narrow margin targets create instability and undermine long-term policymaking.
The IFS has suggested a shift towards a more comprehensive “fiscal light” framework to reduce the need for hasty policy changes amid fluctuating forecasts.
The statement also came after controversy at the OBR, which accidentally published market-related material ahead of the November Budget. Former chairman Richard Hughes resigned after the incident and the regulator will publish its new forecasts with no permanent successor in place.
As the government prioritizes economic expansion, Reeves is expected to reiterate commitments to boost investment, boost employment and stabilize public finances.
While the spring statement lacks the drama of a Budget, it will provide an important snapshot of the UK’s economic development and a signal of whether the Chancellor’s financial strategy remains intact ahead of the potentially more consequential showdown in the autumn.
