Think tank urges govt to minimise policy uncertainty in Spring Forecast

The lack of changes to fiscal forecasts since the Budget means the government should prioritise minimising policy uncertainty and double-down on boosting growth, according to the Resolution Foundation.

Analysis published by the think tank estimated that news on the economy had been “small and offsetting” in the three months since the November Budget.

The current budget was estimated to be in surplus by just over £20bn in 2029/30, approximately £1bn lower than in November.

Growth was 0.1 per cent in the fourth quarter of 2025, below the 0.3 per cent expected by the Office for Budget Responsibility (OBR), while inflation was 0.2 percentage points lower than forecast.

While the think tank believed lower net migration data, and the U-turns on inheritance tax and business rates, would likely increase the OBR’s borrowing forecast by around £6bn, this would be largely offset by falls in the cost of government borrowing.

The Resolution Foundation warned that large risks to public finances remained, with falling net migration potentially leading to a reduction in future government tax receipts by £10bn or more.

Furthermore, risks of future policy decisions, such as increased defence spending, also remained.

However, weak forecast wage growth could reduce borrowing by as much as £20bn.

The think tank said that policy uncertainty had weighed on business and consumer sentiment and applauded the Chancellor for attempting to reduce it, including through a potentially low-key Spring Forecast.

Despite this, the foundation argued there should be no delay in efforts to boost growth and responding to a weakening labour market.

It also urged the government to resist the temptation to curb what the OBR can publish, and act quickly to appoint a new chair and expand its resources.

“The small and offsetting news since last year’s Budget means that the Chancellor’s ‘headroom’ will be little changed when the OBR produce their updated forecasts in March,” commented Resolution Foundation chief economist, James Smith.

“To avoid raising already heightened policy uncertainty, it is understandable that the Treasury is making the Spring Forecast a low-key event.

“But economic policy should not shut down until the Budget in the autumn. Instead, the government should ‘double down’ on efforts to raise growth, help those struggling with the high cost of living and address rising unemployment.’’

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