2025 Spring Statement - the economic picture

26 Mar 2025

Within her Spring Statement speech, Chancellor Rachel Reeves revealed that the Office for Budget Responsibility (OBR) has halved UK economic growth from 2% in October 2024 to 1% in 2025.

However, the OBR has also upgraded longer term growth estimates for 2026 and every year thereafter. The OBR anticipates Gross Domestic Product (GDP) growth of 1.9% in 2026; 1.8% in 2027; 1.7% in 2028; and 1.8% in 2029.

The Chancellor said that by the end of the forecast, the UK economy will be larger compared to the OBR's forecast at the time of the Budget in October.

In its latest forecast, the OBR said that inflation will average 3.2% in 2025, and will subsequently 'fall rapidly' to 2.1% in 2026 and reach the Bank of England's target of 2% in 2027.

Ms Reeves also stated that increased borrowing costs put budget rules 'at risk'. According to the OBR's latest forecast, the current budget would have been in deficit by £4.1 billion in 2029/30 – in the Autumn of 2024, it was forecast to be in surplus by £9.9 billion.

The Chancellor stated she has 'restored in full our headroom', moving from a deficit of £36.1 billion in 2025/26 to a surplus of £9.9 billion by 2029/30.