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2026 spring forecast: A summary

On 3 March 2026, the Office for Budget Responsibility (OBR) published updated forecasts for the UK’s economic and fiscal outlook. The OBR is the independent public finances watchdog and produces the official forecasts for the economy and public finances used by the Chancellor.

The Chancellor of the Exchequer, Rachel Reeves, responded to the forecast in a statement to the House of Commons. The Chancellor said the new forecasts from the OBR show “that our the plan is the right one: inflation is down, borrowing is down, living standards are up and the economy is growing.”

As expected, the Chancellor didn’t make any new spending or tax announcements. She is aiming to restrict such announcements to the annual Budget.

The OBR’s forecast was finalised before conflict escalated in the Middle East. The OBR acknowledged that the escalating conflict “could have very significant impacts on the global and UK economies”. The Library’s Iran in 2026 page collects our research on the situation in the region, challenges facing Iran, and UK response.

The OBR’s economy forecast

Compared with its November 2025 forecasts, the OBR lowered its forecast for GDP growth for 2026 from 1.4% to 1.1%. This reflects weaker-than-anticipated GDP data at the end of 2025, higher unemployment and subdued business sentiment. OBR forecasts for 2027 and 2028 were raised slightly from 1.5% to 1.6% in each year.

The OBR raised its forecasts for the unemployment rate, reflecting weaker figures in the second half of 2025 as the labour market cooled.

The OBR lowered its inflation forecast for 2026 on average, compared with its November forecast, from 2.5% to 2.3%, citing lower food and energy prices. However, these forecasts were made prior to escalation of the US–Israeli strikes on Iran on 28 February 2026 and subsequent events. These events led to sharp increases in the prices of oil and natural gas, as of the time of the Chancellor’s statement, potentially leading to higher inflation in the UK. There is a great deal of uncertainty, however, and much depends on both the magnitude and duration of these higher energy prices.

The OBR’s public finances forecast

Government borrowing

The OBR forecasts that government borrowing will decrease from £153 billion in 2024/25 to £133 billion in 2025/26. Borrowing is then forecast to fall each year, reaching £59 billion in the final year of the OBR’s current forecast period (2030/31).

Less borrowing in most years, compared with the November 2025 forecast

The OBR’s forecast for borrowing is lower in most years, compared with the November 2025 forecast. The improvement is relatively small. The largest difference is in 2030/31, when borrowing is forecast to be around £8 billion lower than it was in the November 2025 forecast.

The improvement is largely because the OBR now forecasts higher government tax and other receipts.

Government debt

Government debt was equivalent to 93% of GDP at the end of 2024/25. The OBR forecasts that government debt will increase to 96% of GDP by the end of 2028/29. It will then fall to around 95% of GDP by the end of 2030/31.

The fiscal rules

The government has targets for its day-to-day budget and public sector net financial liabilities in 2029/30, widely known as the Chancellor’s ‘fiscal rules’. The Library briefing The UK’s fiscal targets explains what the rules are.

The fiscal rules have not been formally assessed by the OBR in the March 2026 forecast. This is because the rules are now only being assessed once a year, rather than alongside each of the two OBR forecasts. The change is designed to keep the Budget as the single fiscal event.

While there was no formal assessment of the fiscal rules, the OBR’s March 2026 forecast of the day-to-day budget and public sector net financial liabilities shows that the government remains on course to meet the fiscal rules.