Forecasts from the Office for Budget Responsibility provided in Chancellor Rachel Reeves’ Spring Statement advised that the UK economy is heading in the right direction.
She asserted that the Government’s current plan is the right one for the UK as “inflation is down, borrowing is down, living standards are up and economy is growing”.
The key takeaway figures from this statement are:
- Economy expected to grow by 1.1% in 2026, down from the 1.4% originally forecast
- Inflation forecast to fall faster than previously thought, reaching 2.3% during 2026 before reaching Bank of England target of 2% by end of year
- Unemployment is expected to now peak at 5.3%, up from 4.9% peak forecast at the Budget
- Government’s fiscal headroom – its buffer in the case of economic shocks – has risen from £21.3bn to £23.6bn, putting the Government in a better position to respond to economic uncertainties)
Cumbria Chamber of Commerce managing director Suzanne Caldwell said: “While the direction of travel appears positive, growth is slow and more needs to be done to boost the economy.
“It’s also important to note that the OBR’s inflation forecast was finalised before the escalation of the conflict in the Middle East, so the impact of this conflict has not been considered and the statement is already out of date.
“The widening conflict in the Middle East is causing increasing disruption to oil and gas supplies and shipping. That inevitably adds a fresh element of uncertainty on prices and government borrowing.
“Recent research carried out by the British Chambers of Commerce shows that more businesses want to expand this year, with nearly half intending to grow, compared to a third in 2025. And our own interactions with businesses here in Cumbria also reflect keenness to expand.
“For this growth to be achieved the government needs to focus on boosting exports, increasing regional investment and transforming productivity.
“An immediate priority must be accelerating long overdue business rates reform and making sure changes to employment rights currently in the pipeline don’t add unnecessary costs.
“Alongside this, businesses need policies that help them invest in skills and AI to increase productivity.
“Trade is also vitally important. Tariffs aren’t going away and the EU Reset needs to be properly handled to give British businesses the best platform possible to grow exports.
“With growing geopolitical uncertainty, we need to get Defence right. So the Government must unveil its Defence Investment Plan as soon as possible. It’s vital for the UK’s security and our economy.
“Clear spending decisions would unlock private investment, support SMEs, and boost jobs, skills and regional growth. But it is crucial that government procurement gives smaller businesses the chance to compete.
“The plan also strengthens the UK’s case for access to the EU’s defence finance facility.
“That could give British businesses a chance to bid into major European defence projects and secure further export-led growth.
“Overall, today’s statement ignited positive discussion about the UK economy’s growth but more needs to be done to support businesses to turn expansion intentions into reality and so accelerate economic growth.”
