What's happened
Rachel Reeves announced an early spring statement for 3 March, aiming to restore stability after a year of tax speculation that hurt business confidence. The Office for Budget Responsibility will provide an interim forecast, but without assessing the government's fiscal performance, to avoid further market volatility.
What's behind the headline?
The upcoming March forecast signals a strategic shift by the UK government to avoid repeating last year's fiscal turbulence. By requesting an interim OBR forecast without a formal assessment against fiscal rules, Reeves aims to provide stability for families and businesses. This approach reflects a deliberate effort to reduce market uncertainty, especially after the OBR chair's resignation and leak scandals. However, the broader economic outlook remains cautious. Despite recent signs of a potential uptick in activity, such as improved PMI data and easing consumer fears, underlying issues like high inflation, sticky bond markets, and cautious spending persist. The government’s decision to delay a formal performance review of fiscal rules indicates a desire to maintain flexibility, but it also risks prolonging market doubts. The real challenge will be balancing fiscal discipline with growth stimulation, as private sector activity continues to decline and unemployment remains high. The next few months will reveal whether this cautious approach restores confidence or if deeper structural issues will continue to weigh on the UK economy.
What the papers say
The Guardian reports that Reeves' March statement aims to bring stability after a turbulent year marked by leaks and market sell-offs, emphasizing her strategy to avoid formal assessments that could trigger further volatility. Politico highlights the government's decision to request an interim forecast without evaluating performance against fiscal targets, a move designed to prevent market panic. Reuters notes that the resignation of the OBR chair and leak investigations have compounded uncertainty, prompting Reeves to adopt a more cautious fiscal stance. Contrasting opinions suggest that while the government seeks to stabilize markets, critics warn that delaying performance assessments could undermine long-term fiscal credibility. The Guardian emphasizes the importance of this strategic shift, while Politico and Reuters focus on the risks associated with ongoing political and market instability.
How we got here
The UK economy experienced unexpected contraction in October 2025, with ongoing uncertainty fueled by tax speculation ahead of the November budget. The government’s fiscal rules and the resignation of the OBR chair amid leaks have contributed to market instability. Reeves increased her fiscal headroom to buffer against shocks, but the political and economic environment remains fragile.
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Rachel Jane Reeves is a British Labour Party politician serving as Shadow Chancellor of the Duchy of Lancaster and Shadow Minister for the Cabinet Office since 2020. She has been the Member of Parliament for Leeds West since 2010.
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The Office for Budget Responsibility is a non-departmental public body funded by the UK Treasury, that the UK government established to provide independent economic forecasts and independent analysis of the public finances.
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The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based.