Will Rachel Reeves’s 2026 spring forecast be as low key as promised?

We have become accustomed to having (at least) two fiscal events a year, with the chancellor standing up in the Commons and announcing a raft of new policies alongside the OBR’s forecast. On coming into office, Reeves said she would put an end to the disruption caused by this biannual fiscal fanfare and focus on having just one fiscal event a year, the autumn budget.  

This position, which we commended at the time, did not hold. By the time of the spring statement in 2025, the government announced a set of welfare policy changes to meet its fiscal rules. This episode encapsulated many of the problems with how the UK makes fiscal policy: frenzied speculation was followed by a rushed policy change; measures were announced to target a spuriously precise ‘headroom’ number; at least some of the proposed changes were reversed.

The government is right to stress that 3 March is not a budget

The government has been clear that this spring forecast is not a budget or a fiscal event, so we are not expecting significant tax or spending announcements. The forecast is even scheduled for Tuesday rather than the usual prime-time post-PMQs slot.  

So why is the spring forecast happening at all? By law, the OBR must produce economic and fiscal forecasts at least twice each fiscal year, and the chancellor must respond to both. This spring forecast is the second OBR forecast of the fiscal year.

The UK’s economic outlook hasn’t radically changed since last autumn’s budget

There haven’t been big changes to the UK’s economic outlook since the budget, so the chancellor is unlikely to have to address the kind of deteriorating forecasts for the public finances which she faced at both the spring statement and the autumn budget in 2025.

The cost of government borrowing has been a bit lower than the OBR previously expected, which will help the public finances, and the government’s latest tax and borrowing figures were surprisingly good. ¹⁰ https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicsectorfinance/bulletins/publicsectorfinances/january2026  But this is offset by lower-than-expected growth and migration. The OBR’s migration assumptions already looked too high at the autumn budget, so some adjustment is likely.  

Inflation has remained above target, but the Bank of England now expects inflation to slow much more quickly in 2026, in large part because of energy price cuts and other bill freezes announced at the budget. Indeed, inflation is likely to finally return to the Bank of England’s 2% target in the coming months.

The big judgement in the OBR’s forecast at the 2025 budget was to revise down the expected rate of productivity growth in the economy. There is some recent evidence to suggest that productivity might finally be turning a corner. ¹⁴ https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/labourproductivity/articles/ukproductivityintroduction/octobertodecember2025andjulytose…  But given how long we waited for the downward revision, the OBR is likely to want to see more data before they consider revisiting that decision.

The OBR won’t assess the fiscal rules, but will update its assessment of government policy

As announced at the autumn budget, the OBR will now only explicitly assess whether the government is on track to meet its fiscal rules at budgets. This is a welcome change to further reduce the incentive to turn the spring forecast into a fiscal event. But it will still be easy for observers to work out whether the government is on track and it is doubtful whether this change by itself would make a big difference to the government’s response if it was clearly on track to breach its rules.

Nevertheless, the OBR will update its forecast to include policy measures announced since the autumn budget. This includes the partial reversal of changes to agricultural and business property reliefs from inheritance tax and the changes to business rates on pubs. Both changes were made to soften the impact of previous policies announced by this government. These changes will affect the OBR’s overall outlook, although the costs of these measures will be relatively small in the context of the wider forecast. The pubs package is expected to cost around £80m annually ¹⁵ www.theguardian.com/business/2026/jan/27/pubs-support-package-business-rates-rachel-reeves-england-wales  while the inheritance tax changes will likely cost around £150m in 2029/30. ¹⁶ IfG analysis of OBR policy measures database and government statement on latest changes (5 January 2026)

A fiscal ‘non-event’ would be a good thing

Rachel Reeves has long said that she wants to bring the UK into line with IMF recommendations and international best practice and to have only one significant fiscal event a year – something the IfG has been proposing since our 2017 Better Budgets report and which a previous Conservative chancellor, Lord Hammond also endorsed. The big benefit is that this allows more time for development of options for the autumn budget and reduces the pressure to find measures for the sake of them.

The welfare reforms introduced at last year’s spring statement were rushed. In reversing course on many of them – the government have also arguably limited their options for necessary future reform.

As long as markets believe that the chancellor is committed to meet their fiscal rules at the principal fiscal event, there should be no need to chase small changes that appear in the spring. Forecasts can and do change unpredictably, so knee-jerk responses may fix a short-term issue at the expense of better long-term policy making. Anything that acts as a brake on the propensity of chancellors to tinker with the tax system is to be welcomed.