Professor Joe Nellis, of Cranfield School of Management and economic adviser to MHA, gives his initial assessment of the government's Spring Statement by Chancellor of Exchequer Rachel Reeves today (Wednesday)
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THE CHANCELLOR’S statement and presentation of the Office for Budget Responsibility’s forecast today has proved what we already knew. There is no instantaneous cure to the economic malaise the UK finds itself in.
The slashing in half of the Office for Budget Responsibility’s forecast for growth in 2025 to 1% is certainly a setback for the Chancellor.
Yet this was a Spring Statement to calm the nerves, with no big surprises and aiming to set the foundations for long-term sustainable growth.
After increased borrowing costs wiped out the Treasury’s fiscal headroom in the time since the October Budget, the Chancellor was keen to reassure the financial markets by announcing that they would meet the investment and stability rules two years earlier than previously expected.
She was also able to offer a glimmer of hope. The OBR predictions for growth next year and every year thereafter have been upgraded to 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.
The conditions for growth will need to be created. The government will be hoping that investment in housebuilding and defence can be the driving forces behind this.
Professor Joe Nellis is economic adviser at MHA, the accountancy and advisory firm and Professor of Global Economics at Cranfield School of Management.
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