The Chancellor's Spring Statement 2026 - Key Takeaways
Following the tax-raising Autumn Budget, Rachel Reeves’ 2026 Spring Statement focused more on reviewing recent economic forecasts than introducing a raft of new measures.
Here is an overview of the key points.
Economic forecasts
Despite the government’s focus on growth, the Office for Budget Responsibility (OBR) has downgraded the UK’s predicted growth for 2026, from 1.4% to 1.1%. It has, however, predicted slightly higher growth for 2027 and 2028, up from 1.5% to 1.6%. The forecast for 2029 – 2030, meanwhile, remains at 1.5%.
While the downgrade is disappointing, of the countries in the G7, only the USA (2.0%) and Canada (1.5%) have higher predicted growth this year, making the UK economy the fastest growing in Europe.
The UK is also set to see a further rise in unemployment. The OBR has now increased its forecast from 4.9% to 5.3% for 2026. Long term, it is expected to fall to 4.1% by 2030. Unemployment levels for younger people are significantly higher at 16%.
Inflation, which was 3.0% in 2025, is predicted to average 2.3% during 2026 before reaching the government's 2% target next year.
Housing
The statement offered little relief for those with mortgages. Average mortgage interest rates are predicted to rise from 4.1% this year to 4.5% by 2030. However, this is slightly lower than the Autumn Budget estimate of 4.8%.
Housebuilding levels are expected to increase from 200,000 in 2025 to 220,000 in 2026, before reaching a 40-year high of 305,000 by 2031. The continued shortage of new homes is expected to put upward pressure on both house prices and rents.
Tax changes
While the Chancellor extended the 5p-per-litre cut in fuel duty until 31 August, the Spring Statement saw the announcement that this would be reversed in stages. This starts with 1p in September, a further 2p in December and the remaining 2p in March 2027.
Initially announced in the Autumn Budget 2024, the staged 14% to 18% rise in Capital Gains Tax (CGT) Business Asset Disposal Relief (BADR) rate will increase from 16% to 18% from 6 April.
As announced at the end of 2025, the Spring Statement also confirmed that the 100% Inheritance Tax (IHT) relief for Agricultural Property Relief (APR) and Business Property Relief (BPR) will be capped at a combined £2.5 million per individual from April 2026.
Spending Measures
Besides confirming the scrapping of the two-child benefit cap and the £150 reduction in household energy bills, both from April, the Chancellor also announced two other spending measures.
These are an increase in defence spending, including a £1bn helicopter deal and £400m for defence innovation, together with a rise in Special Educational Needs and Disabilities (SEND) funding, which includes £4bn to improve inclusivity in mainstream schools.
Impact of the Iran conflict
Although there is enormous uncertainty about the conflict in Iran, the targeting of oil and gas facilities and the blocking of shipping routes have already increased fuel prices. The OBR reports that a prolonged conflict could have a significant impact on the UK economy, including higher inflation and energy bills, lower growth and increased borrowing costs.
If you are affected by the predictions or measures in the 2026 Spring Statement and wish to discuss your options, the Wilkinson Woodward team is more than happy to help.