UK Budget Update, Spring Statement, What to Expect
Britain’s Chancellor of the Exchequer Rachel Reeves speaks during the annual meeting of the World Economic Forum (WEF) in Davos on January 20, 2026. The World Economic Forum will be held in Davos from January 19 to January 23, 2026.
Fabrice Cofriny | AFP | Getty Images
As UK finance minister Rachel Reeves prepares to give an official update on the state of the British economy and public finances, economists say they do not expect dramatic improvements.
“Big picture, we don’t expect any fireworks,” Sanjay Raja, Deutsche Bank’s chief UK economist, said in a preview of the spring budget update, formally known as the spring statement, which Reeves will deliver on Tuesday.
The government had already signaled that it was prioritizing the annual autumn budget later in the year as its main economic event, where it presents its major spending and taxation plans for the year ahead.
In November, Chancellor Reeves said the Spring Statement would include an “interim update on the economy and public finances” from the independent public finance watchdog, the Office for Budget Responsibility (OBR), and unless there were any policy changes. “A significant change in economic outlook that requires a response.”
“As the autumn budget came only three months ago, we see very little new information” that could be presented in the 2026 spring statement, King said, adding that “a lot has been done to slow it down”.
Reeves will likely emphasize that her previously unveiled plans, including business tax increases and major infrastructure spending, are beginning to bear fruit.
what to expect
Like the Autumn Budget, the Spring Statement contains the latest economic and fiscal outlook from the OBR, as it assesses the Government’s tax and spending plans.
The OBR is responsible for assessing whether the chancellor is meeting its “fiscal rules” on spending, borrowing and debt reduction, but while it usually assesses this in the autumn and spring statements, it will now only issue an assessment of the fiscal rules in the autumn.
“There won’t be a formal assessment of whether the government is meeting its (financial) targets, but the numbers will be there,” the OBR said.
Analysts will be keeping an eye on how much Reeves will have to meet her fiscal rules, given the U-turn on major public spending initiatives and cost-cutting measures in recent months.
Morgan Stanley economists said in a note ahead of the spring statement that “the headroom will be very easy to estimate and we think the market expects it to remain around £20 billion.” “Fiscal headroom was slightly reduced as a result of modest forecast adjustments, strong withholding tax receipts and £3.5 billion in additional running costs,” he noted.
Britain’s Chancellor of the Exchequer Rachel Reeves (R) stands with Britain’s Prime Minister Keir Starmer (L) after delivering a speech on the second day of the annual Labor Party conference in Liverpool, northwest England, September 29, 2025.
Wet Scarf | AFP | Getty Images
Reeves and the ruling Labor Party will be wary of announcing anything that could upset consumers or businesses as they battle in opinion polls ahead of nationwide local elections in May, the next electoral test of a general election due in 2029.
Deutsche Bank’s king noted that there had been speculation that Reeves might surprise with a sweet treat or two, but added: “We think any new spending measures will be minor – if at all.”
“Big picture… public fiscal pressures are increasing. Expenditure envelopes are tight after the current expenditure review period,” Raja added.
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