The Chancellor’s Spring Statement was always expected to be low profile, with little in terms of new policy, especially compared with the Autumn Budget in November. However, the recent, escalating situation in the Middle East provided a very difficult backdrop, overshadowing the fiscal update. The situation in the Middle East means that the Office for Budget Responsibility (OBR) inflation forecast and GDP forecasts are already too optimistic. This is clearly concerning, as the OBR revised down UK GDP for 2026 from 1.4% to 1.1%, even before accounting for the Middle Eastern conflict on growth, inflation, and delays to interest rate cuts. As a result, the OBR’s forecasts are highly likely to be revised down again at Autumn Budget 2026.
One noteworthy point in the Spring Statement was that the OBR forecasts the low point in house building will be next financial year (2026/27), after which it expects house building to rise very sharply. However, despite this, it still forecasts only 1.3 million net additional dwellings in the UK over the 5-year Parliament. The government's 1.5 million target is for England only over 5 years, and the OBR forecast is equivalent to 1.1 million net additional dwellings in England. So the OBR forecasts that the government will miss its house building target by 400,000 homes or 26%. Furthermore, given that the OBR forecasts are overoptimistic due to the recent Middle Eastern conflict, as inflation will be higher and there will be fewer, delayed interest rate cuts than the OBR has forecast, this suggests that the OBR’s house building forecasts will be revised down further at Autumn Budget 2026.