The UK’s economic forecast has been downgraded for 2026 but will then improve – and unemployment will peak this year, the chancellor has revealed.
Giving her spring statement in the House of Commons, Rachel Reeves said gross domestic product (GDP) will now grow “slightly slower in 2026” than previously forecast but will increase more than was expected in 2027 and 2028.
GDP is now forecast to grow by 1.1% in 2026, 1.6% in 2027 and 2028, and 1.5% in 2029 and 2030.
The Office for Budget Responsibility’s (OBR) forecast in last November’s autumn budget was 1.4% for 2026, and 1.5% for 2027, 2028, 2029 and 2030.
The chancellor addresses MPs
Ms Reeves also said unemployment is set to peak later this year, after already rising, but will fall from 2027-2030, ending at 4.1% lower than it was in 2024.
The chancellor, who had promised a low-key statement, said the OBR’s forecast shows that Labour’s choices “are starting to pay off”.
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