- By Arthur Le Geyt, Research Manager, Buckinghamshire Business First
- 4 March, 2026
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On March 3rd 2026, the Chancellor of the Exchequer, Rachel Reeves, gave a statement to the House of Commons in response to the Office for Budget Responsibility's (OBR) economic and fiscal forecast.
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No changes to policy were announced, with the focus on new economic and fiscal data and forecasts.
However, note that forecasts may now be outdated, as they were prepared before the US-Israel-Iran conflict, which will have significant impacts on energy prices and political uncertainty.
New OBR medium-term forecasts for the next five years were the main feature:
- GDP growth forecasts have been revised down, with growth of 1.1% forecast for 2026 (down from 1.4% in 2025); 1.6% in both 2027 and 2028; and 1.5% in both 2029 and 2030. While growth forecasts from 2027 onwards have been revised up, note that GDP growth is likely to be constrained further by oil price rises and global conflict.
- 5.6% GDP per capita growth is expected during the remainder of the parliament – marginally higher than the previous forecast, driven by assumed higher investment. This could be eroded by inflation caused by higher oil prices.
- Inflation forecasts have been revised down, compared to the November 2025 forecast, to reflect recent slowing inflation. CPI inflation is forecast to fall from 3.4 per cent in 2025 to 2.3 per cent in 2026 (down 0.2% on November 2025 forecast) and 2.0 per cent from 2027 onwards. This could be positive for supporting real disposable income, increasing consumer demand.
- Unemployment rate forecasts have been revised up for 2026, and are expected to peak in 2026, but fall in the following four years. The unemployment rate is forecast to rise from 4.75% per cent in 2025 to a peak of 5.3% in 2026, a higher peak than previously forecast, with unemployment returning to 4.1% by 2030.
- The tax-to-GDP ratio is forecast to increase to a post-war high of 38 per cent of GDP in 2030-31.
Overall, changes to forecasts have been limited, except for inflation and growth being revised down slightly, and with unemployment expected to peak higher in 2026 than previously forecast. However, recent global conflicts are likely to weigh on these forecasts, reducing growth and putting upward pressure on inflation.
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