Rachel Reeves has insisted her economic plans will protect families in an ‘uncertain’ world as she delivered her Spring Statement to MPs in the House of Commons
Rachel Reeves has insisted her economic plans will protect families in an “uncertain” world as she delivered her Spring Statement to MPs.
As war rages in the Middle East, the Chancellor said she would chart a course through the turbulence to protect people from shocks in a pared back speech designed to demonstrate stability.
In a speech that lasted just 23 minutes, she said: “In an increasingly dangerous world, I am proud to be the Chancellor that is delivering the biggest uplift in defence spending since the Cold War, with £650 million committed in January to upgrade our typhoon fighter jets, a new Royal Navy frigate launched from Rosyth last week, and just yesterday, our £1 billion helicopter deal with Leonardo.
“I am in no doubt about Britain’s ability to navigate the challenges we face.
“The plan that I have been driving forward since the election is the right one – stability in our public finances, investment in our infrastructure including our Armed Forces, and reform for Britain’s economy.”
Ms Reeves said she had broken with “the failed economic dogmas of the past” – and said the forecasts from the budget watchdog showed her plan was starting to pay off.
Here’s what you need to know.
READ MORE: Spring Statement 2026 LIVE: Rachel Reeves says public will be £1,000 better off per year
1. People to be £1,000 better off a year by 2029
Rachel Reeves has told the Commons people will be £1,000 better off a year by the next election – which is expected to be in 2029.
The Chancellor told the Commons: “I can confirm that GDP per person is set to grow more than was expected in the autumn, with growth of 5.6% over the course of this parliament…
“And by the next election, after accounting for inflation, people are forecast to be £1,000 better off per year. We promised change and we are delivering that change.”
She admitted she is still not “satisfied” yet by the growth forecasts and hit out at the “deep economic scars” left by the Tories.
2. Growth downgraded in 2026 – but upgraded for after
Ms Reeves sets out that the Budget watchdog’s growth figures are “largely unchanged”.
She admits the economy will grow slightly slower this year, but will then grow faster next year and the year after. This is why people will be better off by £1,000 a year by 2029.
The Chancellor tells the chamber: “Today, the Office of Budget Responsibility has updated its growth forecasts, including reflecting lower net migration. Average growth across the forecast period is largely unchanged. While the OBR has adjusted the profile of GDP so that it grows slightly slower in 2026 and then faster in both 2027 and 2028.
“So GDP is forecast to grow by 1.1% in 2026, 1.6% in both 2027 and 2028, and 1.5% in both 2029 and 2030. I’ve always said that growth is for a purpose, to make working people better off, and I can confirm that GDP per person is set to grow more than was expected in the Autumn, with growth of 5.6% over the course of this parliament. That compares to a fall in GDP per capita in the last parliament.”
3. Vow to boost EU alliances and AI
Ms Reeves revealed her second Mais lecture – a major annual economic speech by the Chancellor – will have three major pillars: Strengthening international alliances, harness the power of AI and unlock opportunities.
The Chancellor said: “In my second Mais lecture in two weeks time, I will set out three major choices that will determine the course of our economy into the future: To go further in strengthening our global relationships, breaking down trade barriers and deepening alliances with our European partners for a more secured and connected economy.
“To go further in backing innovation and harnessing the power of AI. So the entrepreneurs and innovators thrive here in Britain, and so that working people reap the rewards. And to go further in transforming our economic geography so that we can build growth on a broad and stable basis, spreading opportunity and unlocking opportunity in every part of Britain.”
4. £18billion fall in government borrowing
Ms Reeves said borrowing is set to reduce by “nearly £18billion compared to the autumn”.
Public sector net borrowing expected to fall from 4.3% this year to 3.6% next year, before hitting 1.8% in 2029-30.
The Chancellor told the Commons: “In their forecasts today, the Office for Budget Responsibility show that we are set to reduce borrowing by nearly £18 billion compared to the autumn.
“This year we are set to borrow less than the G7 average, something the Tories never achieved in fourteen years. The forecast today shows that Public Sector Net Borrowing is set to fall from 4.3% this year, to 3.6% next year, then 2.9%, 2.5%, and 1.8% in 2029-30.”
5. Unemployment set to peak this year
Ms Reeves admitted she is “not satisfied yet with these forecasts” and that the economy is not yet working for everyone. But she said the Government’s plans to get more people into work were having an impact – with unemployment set to peak this year before then dropping.
She said she will set out more reforms in “the coming weeks” to undo the “Tory legacy of neglect” of young people’s employment opportunities.
She told MPs: “I know that the economy is not yet working for everyone, and that the deep economic scars left by the party opposite (the Tories) and their mates in Reform are still blighting the lives of too many people.
“In today’s forecasts, unemployment is set to peak later this year and then fall in every year of the forecast period, ending the forecast period at 4.1% lower than it was at the start of the parliament. But young people in particular are still suffering from the aftermath of years of Tory mismanagement in the last five years of the previous government, the number of young people not in education, employment or training increased by 113,000.”
6. Inflation to come down faster than expected
Inflation is set to fall faster than expected according to the Budget watchdog’s latest forecasts.
In November, the OBR forecast CPI inflation of 2.5% for this year (2026). It now expects it to be 2.3%.
The OBR’s economic and fiscal outlook today said: “Slowing wage growth contributes to our forecast of CPI inflation falling from 3.4 per cent in 2025 to 2.3 per cent in 2026 and 2.0 per cent from 2027 onwards. The central forecast for CPI inflation in 2026 is 0.2 percentage points lower than in November, and broadly similar thereafter.
“Lower inflation this year is driven by greater slack in the economy, and lower food and energy prices. Market expectations for gas prices have fallen by 15 per cent on average over the forecast since November. Market participants expect Bank Rate to fall from 3.75 per cent to 3.3 per cent by late 2026, which is marginally lower in the near term than in November. Bank Rate is then expected to rise to 4.0 per cent by the end of 2030. Expectations for gilt yields are also below the November forecast.”
But the OBR’s forecasts were calculated before the conflict in Iran spiralled over the weekend – with the crisis set to impact gas and oil prices and inflation.