The Office for Budget Responsibility believes it will reach its inflation target of 2%. It cites a loosening labour market and falling energy and food price inflation as key contributing factors.
The central forecasts in this update are similar to those set out in November 2025. Near-term cyclical weakness means it expects real GDP growth to slow from 1.4% in 2025 to 1.1% in 2026, before averaging 1.6% a year over the rest of the forecast.
Public sector net borrowing set to fall from 4.3% this year, decreasing to 1.8% in 2029–30.
However the forecasts don’t take into account the impact from the jump in energy prices and turbulence caused by the escalating war in Ukraine and air strikes in the Middle East.
Commenting on the OBR figures announced at the same time as the Chancellor’s Spring Statement, Wealth Club chief investment strategist Susannah Streeter said: “Even though Rachel Reeves championed forecasts of a further fall in inflation, there’s a clear and present danger of the price spiral taking off again due to escalating conflict with Iran.
She added: “The potential wiggle room identified in the OBR’s latest projections also risks being swallowed up by the economic repercussions of war in the Middle East. Hopes for an interest rate cut later this month are being dramatically scaled back due to the spike in energy prices.”
OnTheMarket president Jason Tebb said: “Today’s Spring Budget was as low key as many of us were hoping for. “After the turbulence surrounding the Autumn Budget, a continued period of clarity and certainty is now what the market needs more than ever.
“This is certainly a step in the right direction to restoring a sense of stability and rebuilding the confidence among buyers and sellers that drives market momentum.”
Mortgage Advice Bureau director of home moving strategy Ben Thompson said that in the current climate, ‘no surprises’ was actually good news.
“We weren’t expecting fireworks from the Spring Statement, and in many ways that’s reassuring. Right now, the housing market doesn’t need dramatic announcements or last-minute policy changes – it needs stability. So a statement that leaves housing largely untouched is, in itself, a positive.
“That said, it does feel like another missed opportunity. Big issues like Stamp Duty reform still haven’t been tackled, and that continues to hold people back. For many families, it’s not the mortgage that stops a move – it’s the hefty additional costs. These expenses can shut down plans before they’ve even started, which slows the whole market and, ultimately, the wider economy.”
