UK Government Spring Forecast 2026
Chancellor Rachel Reeves MP delivered a Spring Forecast for 2026 to MP’s in Parliament on Tuesday 3rd Mar.
Some of the main points of interest include (UK-wide figures):
Real GDP growth is forecast to slow from 1.4% in 2025 to 1.1% in 2026. GDP growth to pick up to average 1.6 per cent a year from 2027 to 2030.
CPI inflation is projected to ease from 3.4% in 2025 to 2.3% in 2026, settling at 2.0% from 2027 onwards.
Interest rates are anticipated to decline from 3.75% to 3.3% by the end of 2026, before edging up steadily to 4.0% by 2030.
The unemployment rate is forecast to increase from 4.75% in 2025 to a high of 5.3% in 2026, then gradually fall back towards 4.1% by 2030
Nominal weekly earnings are expected to grow by around 3.5% in 2026, averaging approximately 2.25% per year thereafter.
The Chancellor said her economic plan is important in a world that has become yet more uncertain, to secure the economy against shock.
Impact of selected taxes
Income tax* (excluding self assessment) and National Insurance contributions are forecast to raise £480 billion (15.7 per cent of GDP) in 2025-26, a 11.7 per cent increase from 2024- 25. *(Please note the responsibility for Income Tax is split between the Scottish Government and the UK Government).
Alcohol duty receipts are expected to be £12 billion (0.4 per cent of GDP) in 2025-26, a 2.0 per cent decline relative to 2024-25.
Tobacco duty receipts are expected to be £8 billion (0.3 per cent of GDP) in 2025-26, a 3.1 per cent decline relative to 2024-25.
Vaping duty, effective from October 2026, is expected to raise £0.2 billion in 2026-27, rising to £0.6 billion by 2030-31.
An assessment of the potential economic impacts of the Employment Rights Act has not been included in this forecast.
Devolved Nations
Decisions at Spring Forecast 2026 mean that the devolved governments are receiving an additional £1.8 billion Resource Departmental Expenditure Limit excluding depreciation (RDELex) and £45 million Capital Departmental Expenditure Limit (CDEL) through the application of the Barnett formula between 2026-27 and 2029-30.
The Scottish Government will receive an additional £900 million RDELex. It will also receive £20 million CDEL.