Six bombshells from Rachel Reeves as unemployment up – however Brits ‘£1,000’ higher off

Against a backdrop of global uncertainty and shifting forecasts, the government’s economic chief remains confident in her strategy, even as official predictions for growth dip in the near term

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Chancellor Rachel Reeves has unveiled her Spring Statement, delivering a mixed bag of economic bombshells that will affect every Brit.

Despite a gloomy downgrade to the UK’s growth forecast for 2026, Reeves insists her plan is the right one for the country, promising that families could be over £1,000 a year better off by the next election.

The Office for Budget Responsibility predicts unemployment will peak later this year before falling, while borrowing is set to tumble by billions. With inflation expected to hit target sooner than planned and no new tax or spending changes announced, Reeves faces tough questions as global uncertainty looms.

Here are Reeves’ six key announcements from her statement:

1. Growth downgraded for 2026

Chancellor Rachel Reeves said she had the “right economic plan” for the UK despite the budget watchdog slashing its forecast for growth this year. The Office for Budget Responsibility indicated gross domestic product will increase by 1.1% in 2026, down from the 1.4% it forecast in November.

2. Brighter outlook for later years

However, the watchdog upgraded its forecasts for 2027 and 2028 from 1.5% to 1.6%. Updating MPs on the forecasts in her spring statement, against the backdrop of the war in the Middle East, Ms Reeves said: “This Government has the right economic plan for our country, a plan that is even more important in a world that in the last few days has become yet more uncertain.”

She added: “The new forecasts from the Office for Budget Responsibility confirm that our plan is the right one – inflation is down, borrowing is down, living standards are up and the economy is growing.” The Chancellor said the changes in GDP forecast took account of a fall in net migration and said average growth across the next five years was “largely unchanged” despite this year’s downgrade.

“But I am not yet satisfied with these forecasts,” she said, acknowledging “the economy is not yet working for everyone”.

3. Unemployment to peak, then fall

Unemployment is to peak later this year and then fall in every year of the forecast period, ending the period at 4.1% – lower than it was at the start of the Parliament, the Chancellor said.

4. Borrowing to drop dramatically

Borrowing is to reduce by “nearly £18 billion compared to the autumn”, and public sector net borrowing is expected to fall from 4.3% this year to 3.6% next year, then 2.9%, 2.5% and 1.8% in 2029-30, she said.

5. No new tax or spending changes

The Chancellor’s statement did not include any tax and spending changes, after Ms Reeves committed to delivering just a single budget a year.

6. Inflation target to be hit sooner

The Office for Budget Responsibility (OBR) projects that inflation will fall from 3.4% in 2025 to 2.3% in 2026, and then again to 2% from 2027 onwards. The OBR forecast that the 2% target for the UK inflation rate will be met in “late 2026”.

This would mean the UK meets its target sooner than originally predicted following the November Budget – where the OBR had forecast a rate of 2.5% in 2026, then 2% in the following three years after that. In its release, the OBR includes comments to that effect.

The organisation says its forecast “lies in the middle of a wide range of possible outcomes”, with “significant risks around it”. “Conflict in the Middle East, which escalated as we were finalising this document, could have very significant impacts on the global and UK economies,” it says.

The Chancellor told MPs unemployment is set to peak later this year and then fall in every year of the forecast period, ending the period at 4.1% – lower than it was at the start of the Parliament. The Office for Budget Responsibility has “adjusted the profile of GDP so that it grows slightly slower in 2026 and faster in 2027 and 2028”, growing by 1.1% in 2026, 1.6% in 2027 and 2028, and 1.5% in 2029 and 2030.

And she pledged to leave families “better off”, claiming that by the next election, after accounting for inflation, people are forecast to be over £1,000 a year better off.”

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