On 3 March 2026, Chancellor Rachel Reeves presented the Spring Statement alongside the OBR's updated economic and fiscal forecast. The Chancellor said the plan was working. The OBR's own numbers told a more complicated story. This page explains what was actually announced, what the numbers show, and what it means for the public finances over the next five years.
What the Chancellor Said vs What the Numbers Show
✅ What the Chancellor Said
- "Inflation is down, borrowing is down, living standards are up"
- Borrowing lowest in six years
- Falling below G7 average for first time in 22 years
- GDP per person to grow 5.6% over the Parliament
- Inflation returning to 2% target in late 2026
- People will be over £1,000/yr better off after inflation
⚠️ What the Numbers Show
- Debt still rising — from 93% to 96% of GDP by 2028/29
- Borrowing still £129bn — sixth highest ever in any year
- GDP growth cut from 1.4% to 1.1% — below even modest expectations
- Unemployment risen to 4.9% — highest in nearly five years
- Fiscal rules only met with 54% probability margin
- Early 2026/27 borrowing already £8bn above OBR forecast
The Full OBR Forecast in Plain Numbers
| Year | Borrowing | Borrowing % GDP | Debt % GDP | GDP Growth | CPI |
|---|---|---|---|---|---|
| 2024/25 (actual) | £153bn | 4.9% | 93% | 1.4% | 3.4% |
| 2025/26 (actual) | £129bn | 4.3% | 95.9% | 1.1% | 2.3% |
| 2026/27 (forecast) | £108bn | 2.6% | 95.7% | 1.4% | 2.0% |
| 2027/28 (forecast) | £90bn | 2.8% | 96.1% | 1.6% | 2.0% |
| 2028/29 (forecast) | £78bn | 2.3% | 96.0% | 1.6% | 2.0% |
| 2029/30 (forecast) | £68bn | 1.9% | 95.7% | 1.6% | 2.0% |
| 2030/31 (forecast) | £59bn | 1.6% | 94.9% | 1.6% | 2.0% |
The Growth Downgrade — Why It Matters
The OBR cut its 2026 GDP growth forecast from 1.4% to 1.1% — a reduction of 0.3 percentage points that might sound small but compounds significantly over a five-year forecast. The causes cited were: weaker than expected GDP data in late 2025, a looser labour market (unemployment up to 4.9%), and subdued business survey data.
The growth downgrade matters for public finances because slower growth means lower tax revenues. Around four-fifths of the projected improvement in borrowing over the next five years depends on rising tax receipts rather than spending cuts. If growth disappoints, that four-fifths improvement doesn't materialise.
The Fiscal Rules — What They Are and Whether They're Being Met
The government has two fiscal rules:
Rule 1 — Stability rule: Day-to-day spending must be covered by tax revenues (no borrowing for day-to-day costs) by 2029/30.
Rule 2 — Investment rule: Public sector net financial liabilities (PSNFL) must be falling as a share of GDP in 2029/30.
The OBR confirmed at the Spring Statement that both rules are being met — but only just. The headroom against the stability rule is £9.9bn — less than half the £21bn average fourth-year pre-measures revision over the past ten forecasts. The OBR estimates the probability of meeting the rules at around 54% — barely above a coin flip.
The Middle East Risk — What the OBR Didn't Include
The OBR's March 2026 forecast was finalised before the escalation of US-Israeli strikes on Iran on 28 February 2026 and subsequent events. The OBR explicitly stated this could have "very significant impacts on the global and UK economies."
Oil prices rose from around $70 to $85 a barrel in the days around the Spring Statement, before rising further. Higher oil prices would: push up UK inflation (delaying the return to the 2% target), increase the energy import bill, reduce consumer spending, and potentially force the Bank of England to keep rates higher for longer — which would increase the government's debt interest costs.
NIESR estimated that a "prolonged conflict in the Middle East" could add significantly to borrowing, through a combination of higher energy costs and slower growth. They concluded the OBR forecast would likely require upward revision at the Autumn Budget.
What Was Actually Announced — The Policy Measures
The Spring Statement deliberately contained no major new tax or spending announcements. The Chancellor explicitly said she wants the autumn Budget to be the single annual fiscal event. What was announced:
Local authority support: £1.4bn to support councils in 2026-27 — largely covering the inherited SEND (Special Educational Needs and Disabilities) funding crisis in which many councils ran deficits on their SEND budgets.
SEND spending: £4bn per year in additional departmental spending for SEND across the final three years of the forecast — a significant commitment that adds to medium-term spending pressures.
Devolved governments: An additional £1.8bn through the Barnett formula to Scotland, Wales and Northern Ireland — including an exceptional Barnett consequential on the SEND write-off grants.
Cost of living: The £150 energy bill reduction and freeze on rail fares confirmed to remain — cited by OBR as specifically reducing CPI by 0.4 percentage points in 2026-27.
The Long-Term Picture — Unchanged and Alarming
The OBR's long-term projections, last updated in full in 2024 and referenced again at the Spring Statement, remain deeply concerning. On unchanged government policy, debt could rise to around 275% of GDP by the 2070s — driven mainly by the ageing population increasing spending on pensions, health and social care.
In a scenario where the economy also faces significant shocks every nine years (consistent with recent experience: 2008, 2020, 2022 were all nine-year-or-less intervals), debt could rise to 325% of GDP by the 2070s.
The OBR noted that "over the past two decades, UK public sector debt as a share of GDP has nearly tripled" and is "nearly double the advanced-economy average on a comparable basis." Successive governments have set plans to reduce borrowing that were subsequently pushed back by shocks and policy decisions.