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Introduction
The Spring Statement (March 03, 2026) speech was hoped to be "low drama" after the controversy surrounding last year's one and the Autumn Budget.
Experts have called for stability, for example PensionBee says savers need clarity and consistency because retirement planning spans decades. Repeated changes make it "significantly harder" for people to feel confident about their decisions.
Frequent policy shifts can create uncertainty for investors, current pensioners and those planning for retirement. Stability helps people understand how today's decisions will affect their future income.
Rachel Reeves stressed there would be a move back to one major fiscal event per year to restore stability after years of frequent Budgets and mini-Budgets. The Chancellor has said that the government aims to rebuild confidence among businesses and households.
She gave an update on government policies, the UK's economic outlook, including forecasts for inflation, borrowing, and growth. We will look at some of these in more detail below.
Current economic backdrop
The UK recorded a £30.4bn budget surplus in January, double the previous year's figure.
The Chancellor's so-called fiscal headroom has increased from £21.7bn to £23.6bn, to help provide a buffer against unexpected shocks.
Inflation has fallen to 3% (in the 12 months to January 2026), improving the fiscal environment.
Fastest growth in the G7. The Office for Budget Responsibility (OBR) predicts 1.1% (down from 1.4%) for the remainder of 2026.
Future economic backdrop
The OBR's forecast for GDP growth is 1.6% in 2027/28 and 1.5% in 2029/30. GDP should grow 5.6% over the term of this parliament, according to the Chancellor.
The Bank of England and the OBR believe inflation will drop faster than predicted last Autumn. It is expected to hit 2.3%, then 2% in 2027. Rachel Reeves says this is due to the action taken by her at the Budget and that the OBR's forecast will show that the government's choices "are starting to pay off".
However, uncertainties in recent events unfolding in the Gulf are already influencing gas and oil prices. This could add 0.2% to inflation, but wider economic impacts remain to be seen.
The government is expected to reduce borrowing by £18bn, compared to the OBR's Autumn forecast. The Chancellor stated that she is due to hit her main borrowing target in 2029/30 with over £23bn to spare.
The OBR updated its forecast on unemployment, believing those out of work but looking for a job will rise to 5.3% this year (up from their previous forecast of 4.9%).
Future Plans
The Chancellor has stated that she will set out "three major choices that will determine the course of our economy into the future" in a fortnight's time.
She says that they will include harnessing the power of AI, removing trade barriers and strengthening the UK's global relationships. This will spread opportunity around all parts of the country.
Changes to Tax Thresholds
Nothing was announced in the Chancellor's address to parliament. As Rachel Reeves stated, this speech was more of an update on the economy and how government economic policies are working. Therefore, the tax changes announced in the Autumn Budget stand. As a reminder:
Minimum Wage and National Living Wage increase from April
16-17-year-olds and apprentices see a rise from £7.55 to £8.00 an hour.
Workers aged 18 to 20 receive an 85p increase to £10.85 an hour.
Over 21s will get an additional 50p an hour, making their minimum wage £12.71.
Income Tax
For England and Wales:
Personal allowance: 0% (first £12,570 earned)
Basic tax rate: 20% (annual earnings up to £50,270)
Higher tax rate: 40% (from £50,270 to £125,140)
Additional tax rate: 45% (Above £125,140)
For Scotland:
Starter tax rate: 19% (Up to £2,827)
Basic tax rate: 20% (from £2,828 to £14,921)
Intermediate tax rate: 21% (from £14,922 to £31,092)
Higher tax rate: 42% (from £31,093 to £62,430)
Advanced tax rate: 45% (from £62,431 to £125,140)
Top tax rate: 48% (above £125,140)
Income Tax and National Insurance thresholds
The threshold freeze has been extended to 2030/31.
VAT
It will remain at the existing levels for 2026/27.
Corporation Tax
Corporation Tax remains at 25%. The small profits rate and marginal relief also stay as they are. As do R&D reliefs.
There is a reduction to the main rate writing-down allowance from 18% to 14% from April. A new 40% first year allowance came into play from January 1, 2026.
Capital Gains Tax
CGT relief on business sales made to employee ownership trusts fell from 100% to 50% last November.
Inheritance Tax Thresholds
The IHT nil-rate bands will remain unchanged until 2031.
Pensions
Those in receipt of the full new state pension will see an annual increase of £575 from April. Those on the basic state pension will receive an extra £440.
Income from Savings, Dividends and Property
The tax paid on interest received from savings, and income from dividends and property rentals will increase by two percentage points. This will affect dividends from April and savings and property income a year later.
ISAs
Whilst expected, there were no further updates to ISA reforms.
Council Tax
No changes to the Autumn Budget were announced.
Business Rates
Despite pressure from the hospitality sector, no further reduction on business rates was announced.
Stamp Duty
There will be a three year "holiday" for companies newly listing on the London Stock Exchange.
Fuel Duty & new pay-per-mile scheme
Fuel duty will still gradually increase after September. It currently sits at 52.95p per litre.
Despite an outcry from owners of electric vehicles, they will still see a 3p per-mile scheme introduced from April 2028.
Gambling Tax
The Remote Gaming Duty increases in April from 21% to 40%. The bingo tax is being abolished in the same month.
Alcohol and Tobacco Duty
The alcohol duty rate increased in line with the Retail Price Index on February 1, 2026.
The tobacco duty rate increased in line with the RPI + 2 percentage points in November 2025 and will again by the same measure on October 1.
Two-Child Benefit Cap
This cap is still being abolished from April.
Public Transport & Energy Bills
Rail fares were frozen for one year from March 1, 2026.
The average energy bill will fall by £150 from April due to cutting levies. The Energy Company Obligation scheme is being scrapped.
