The Spring Statement will be delivered in Parliament on 3 March, giving an update on the state of the UK economy and the government’s financial outlook.
Unlike the Autumn Budget, the Spring Statement is unlikely to be used for big tax decisions. For businesses it is a useful event as it may set the tone for the months ahead and could give early clues about future tax and spending pressures.
What the Spring Statement is
The Spring Statement is built around the latest set of economic forecasts from the Office for Budget Responsibility (OBR). The OBR publishes forecasts twice a year and considers areas such as growth, inflation, unemployment, government spending and tax income.
The OBR also has responsibility for checking whether the government is on track to meet its self-imposed fiscal rules. However, the Spring Statement will not make a formal assessment of this area as this is now only being reviewed once a year, in the autumn.
Even so, the OBR’s numbers are still likely to influence decisions the Chancellor will make later in the year.
What Is Happening
The Chancellor’s speech is likely to begin shortly after midday on 3 March. As soon as the speech is finished, the OBR’s full forecast will be published on the government website.
This is a change from previous practice, where the OBR would publish their forecast on their own website. However, due to the early accidental release of OBR data at last year’s Autumn Budget, controls are being tightened on how and when the forecast is published.
Will There Be Any Tax or Spending Changes?
This seems to be highly unlikely. The Chancellor has made clear that she intends to announce major policy decisions only once a year, at the Budget in the autumn. The idea is to stop the cycle of constant speculation that can affect business planning and household spending.
However, while we are not likely to see new tax rises or cuts in the Spring Statement, we could perhaps see smaller administrative or follow-up measures.
For most businesses though, the real interest will lie in the OBR’s figures, especially inflation, growth and unemployment, as these influence future interest rates and wage pressures and may indicate the likelihood of tax changes later in the year.
For example, persistent weak growth or rising unemployment may increase the pressure to raise taxes or limit spending. Alternatively, if the OBR gives a more optimistic outlook, especially on inflation, it may strengthen the case for interest rate cuts.
In summary, the Chancellor’s speech is not expected to make sweeping policy changes, but her comments could give a sense of how the government sees the economy developing over the next 12-18 months.
