Chancellor Rachel Reeves is preparing to deliver a deliberately uneventful spring forecast on Tuesday, as she seeks to project calm and competence after a turbulent 18 months in office. With Labour's electoral prospects under scrutiny following a disastrous by-election result, Reeves's political future—and that of Prime Minister Keir Starmer—is seen as hanging in the balance.
Reeves and Starmer entered government in July 2024 vowing to restore stability after years of chaotic Conservative rule. However, each of Reeves's major fiscal events has sparked controversy, including cuts to winter fuel allowance, a £25bn national insurance rise, botched welfare cuts, and a second round of tax hikes last November. Many of these decisions have since been reversed.
In contrast, next week's statement is expected to be a non-event, with Treasury sources insisting there will be 'no policy announcements' and that 'the era of rabbits is over.' Reeves plans to speak for less than half an hour, welcoming the latest Office for Budget Responsibility (OBR) forecasts and highlighting progress on the cost of living, including cuts to household energy bills from April.
Last autumn's budget gave Reeves a £22bn margin for error against her fiscal rules. Since then, economic growth has been slightly weaker than expected, but lower gilt yields have reduced borrowing costs. January's public finances showed a higher-than-expected surplus, partly due to Reeves's tax rises, including the employer national insurance hike, which has been blamed for rising unemployment.
The OBR will factor in additional spending on special educational needs, post-budget policy reversals on inheritance tax for farmers and business rates, and lower net migration forecasts. However, the watchdog is without a permanent director after Richard Hughes resigned, and may be cautious on judgment calls. Economists expect the OBR to show Reeves still has significant headroom, allowing her to keep the forecast 'boring.'
