“Events, dear boy, events”. Rachel Reeves may have the (probably apocryphal, oft-quoted) wisdom of Harold Macmillan in mind today, as she responds to the latest official assessment of the UK economy.
The Office for Budget Responsibility’s new Spring Forecast could, in happier times, have brought the chancellor good news this afternoon.
Economists predict they will show that the UK is still keeping within the OBR’s fiscal forecasts – helped by a record budget surplus in January – and that inflation is heading down towards target.
However, the Middle East crisis mean such predictions are out of date before they’re even published, as the world faces the threat of a new energy crisis.
Read moreYesterday, liquefied natural gas (LNG) prices rocked by over 40%, and oil rose by over 7%, after Qatar’s state-run energy firm halted LNG production and Saudi Arabia temporarily shutting down some units of its massive Ras Tanura oil refinery following attacks by Iran.
These moves, as the US-Israel war on Iran rages, risk reigniting the cost-of-living crisis.
As economists at Investec explain:
double quotation markThe main economic consequence of higher energy prices would be to boost inflation.
In the UK, illustratively, the current level of the oil price would, if maintained, add about 0.2%pts to headline inflation via higher petrol prices; and a sustained 40% shift up in natural gas price futures would boost this by a further 0.7%pts or so, via higher household utility bills.
We’re not expecting major policy changes today, as the government has committed to holding just one major fiscal event each year in the autumn. That’s why it’s billed as the ‘spring forecast’ not the ‘spring statement’.
Instead the chancellor is expected to insist the government has the “right economic plan for the country” in a “yet more uncertain” world.
double quotation mark“Stability in the public finances, investment in infrastructure and reform to our economy.
Building growth not on the contribution of a few people or a few parts of the country, but in every part of Britain with a state that doesn’t stand back, but steps up.”
8am GMT: Worldpanel supermarket inflation and sales figures
9.30am GMT: ONS data: Mergers and Acquisitions involving UK companies: October to December 2025
10am GMT: Flash estimate of eurozone inflation in February
12.30pm GMT: spring forecast statement from Chancellor Rachel Reeves
1pm GMT (roughly): Office for Budget Responsibility’s spring forecasts published
2.30pm GMT: Office for Budget Responsibility press conference
