Reeves delivers low-key Spring Statement amid uncertain global backdrop

Chancellor, Rachel Reeves, has delivered her 2026 Spring Statement in what was an expectedly low-key event that did not include any policy or tax change announcements.

During the speech, Reeves outlined the Office for Budget Responsibility’s (OBR) slightly revised forecast, which predicted greater fiscal headroom, marginally lower inflation, reduced gilt yields, and lower interest rates.

However, Quilter investment strategist, Lindsay James, noted that the events unfolding in the Middle East meant the statement already felt a little out of date.

“Bond yields have risen sharply, expectations for rate cuts have been tapered from two this year to just closer to one, while gas prices have spiked significantly in the last 24 hours, providing fresh fears a looming burst of inflation is coming should the Middle East conflict become protracted,” James added.

“Fiscal headroom, as a result, may need recalculating in weeks to come. Rachel Reeves has historically spoken about shielding the UK economy from future shocks, so this will be a real test of that mantra.”

While the OBR downgraded growth for this fiscal year, it upgraded its forecast for the following two years, although the net outcome remained unchanged.

“Rachel Reeves likes to say this Labour government is stimulating the economy, but the reality is the forecast and the actual results remain underwhelming at best,” James said.

“Reeves said she wouldn’t be satisfied with these forecasts being reality, and neither she should be, but whether she can in fact beat them is subject to events outside of her control.”

James highlighted that global shocks to the economic system have had outsized influence on the economy in the past, and another one looming meant it was unclear where the growth would come from to help counteract those impacts.

“As a result, markets are likely to give little heed to today’s announcements, focusing instead on the new reality we find ourselves in,” James concluded.

These concerns were echoed by Rathbones senior planning director, Faye Church, who noted that the escalated situation in Iran had already raised serious questions as to whether the new forecasts were out of date almost as soon as they landed.

Meanwhile, the statement itself was “intentionally unexciting”, Church added, with the aim not to surprise markets, but to anchor expectations.

“As expected, the set piece did not deliver sweeping tax changes or major spending commitments,” Church continued.

“Notably, the Chancellor offered only silence on pensions, with no policy changes or updates unveiled - a reprieve of sorts after the scale of uncertainty surrounding the pensions regime in the run up to last year’s Budget.

“It’s also worth remembering that economic forecasts are seldom right - they are frameworks, not promises.

“The best response for households is not to try to predict the next twist in global events, but to build resilience into their own finances.

“That means stress testing budgets, maintaining a cash buffer where possible, and keeping investments diversified rather than reacting to every headline.”

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