UK Finance Minister Rachel Reeves speaks at the World Economic Forum (WEF) Annual Meeting in Davos on January 20, 2026. The World Economic Forum will be held in Davos from January 19th to January 23rd, 2026.
Fabrice Coffrini | AFP | Getty Images
As Finance Minister Rachel Reeves prepares to issue an official update on the state of Britain’s economy and public finances, economists say they do not expect a dramatic correction.
“In the grand scheme of things, we don’t expect fireworks,” Sanjay Raja, Deutsche Bank’s chief UK economist, said in a preview of Reeves’ spring budget (officially known as the Spring Statement), which he will unveil on Tuesday.
The government had already indicated that it would prioritize the autumn budget at the end of the year as the main fiscal event, laying out major spending and tax plans for the coming year.
Treasury Secretary Reeves said in November that the spring statement would include an “interim economic and fiscal update” from the Office for Budget Responsibility (OBR), an independent fiscal watchdog, and that there would be no policy changes unless there were “significant changes in the economic outlook that require action.”
“With the Autumn Budget passed just three months ago, I see very little new information that could be presented in the Spring 2026 Statement,” Raja said, noting that “much has been done to downplay” it.
Mr. Reeves will emphasize that the plans he has unveiled so far, including higher taxes on businesses and major infrastructure spending, are starting to bear fruit.
what to expect
As with the Autumn Budget, the Spring Statement is accompanied by the OBR’s latest Economic and Fiscal Outlook, which assesses the Government’s tax and spending plans.
The OBR is responsible for assessing whether the Chancellor is complying with the ‘fiscal rules’ on spending, borrowing and debt reduction, but normally assesses both the autumn and spring statements, but from now on it will only assess the autumn fiscal rules.
“There will be no formal assessment of whether the government is meeting its (fiscal) targets, but figures will be available,” the OBR said.
Analysts are focused on how much fiscal space Reeves has to meet fiscal rules, given the massive public spending initiatives and U-turns on cost-cutting measures in recent months.
“Headroom will be very easy to estimate. We feel the market expects headroom to remain around £20bn,” Morgan Stanley economists said in a note ahead of their spring statement. “Moderate forecast adjustments, strong cash tax receipts and additional current spending of £3.5 billion all combine to result in slightly reduced fiscal space,” they noted.
British Chancellor of the Exchequer Rachel Reeves (Republican) stands alongside British Prime Minister Keir Starmer (left) as he receives applause after delivering a speech on the second day of the Labor Party’s annual conference in Liverpool, northwestern England, on September 29, 2025.
Oli Scarfe AFP | Getty Images
Mr Reeves and the ruling Labor Party will be wary of announcing anything that could upset consumers or businesses at a time when the party is struggling in the polls ahead of national local elections in May, the next electoral test for a general election by 2029.
Deutsche Bank’s Mr. Raja noted that there had been speculation that Mr. Reeves might surprise with a sweetener or two, but added: “Any new spending measures will be modest – if they come at all.”
“The big picture… fiscal pressures are increasing. Spending quotas remain tight after the current spending review period,” Raja added.
