Spring forecast: Rachel Reeves to insist government has ‘right economic plan’, as Middle East crisis threatens inflation spike – live updates | Business
Introduction: Reeves to respond to spring predictions after oil and gas prices rise
Good morning.
“Events, my dear son, events.” Rachel reeves may have (probably apocryphal, often quoted) Harold Macmillan’s wisdom is top of mind today as we respond to the latest official assessment of the UK economy.
In happier times, the Office for Budget Responsibility’s new Spring Forecast could bring good news to the chancellor this afternoon.
Economists predict the UK will still remain within the OBR’s fiscal forecasts, helped by a record budget surplus in January, showing inflation is on track to target.
However, the Middle East crisis means that such predictions become obsolete before they are even published, as the world faces the threat of a new energy crisis.
Yesterday, liquefied natural gas (LNG) prices lurched over 40% and oil rose over 7% after Qatar’s state energy firm halted LNG production and Saudi Arabia temporarily shut down some units of its massive Ras Tanura oil refinery following attacks by Iran.
These moves risk reigniting the cost of living crisis as the US-Israeli war against Iran intensifies.
As economists Investment to explain:
The main economic consequence of high energy prices will be increased inflation.
For example, the current level of the oil price in the UK would be: if it is protectedadd about 0.2 percentage points to headline inflation through higher oil prices; and a sustained 40% increase in natural gas prices would increase this by approximately 0.7 percentage points through higher household electricity bills.
We don’t expect major policy changes today, as the government has committed to holding only one major fiscal event in the autumn each year. That’s why it’s billed as a ‘spring forecast’ and not a ‘spring statement’.
Instead, the Chancellor is expected to insist that the government has the “right economic plan for the country” in an “even more uncertain” world.
reeves He is expected to tell MPs:
“Stability in public finances, investment in infrastructure and reform of our economy.
“Building growth not with the contribution of a few people or a few parts of the country, but with a state that does not step back, but steps up, all over Britain.”
agenda
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08:00 GMT: Worldpanel supermarket inflation and sales figures
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09.30 GMT: ONS data: Mergers and Acquisitions involving UK companies: October to December 2025
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10:00 GMT: Flash forecast for eurozone inflation in February
-
12.30 GMT: Spring forecast statement from Chancellor Rachel Reeves
-
13:00 GMT (roughly): Office for Budget Responsibility’s spring forecasts published
-
14:30 GMT: Office for Budget Responsibility press conference
important events
UK gas price contract rises again
Gas prices are rising in the UK; This increases the risk of rising inflation.
The UK gas futures contract for delivery in April rose 18% to 135.5 pence per therm this morning, following a 40% rise on Monday.
This is the highest level since February 2025 and nearly double the level in the middle of last month.
But this is still much lower than in the early days of the Russia-Ukraine war in 2022, when the gas price briefly rose above 500 pence/therm next month.
Sterling is weakening again this morning, approaching the lows seen in yesterday’s volatile trade.
Sterling fell by 0.5 percent to $1.3342 against the US dollar, which was also on the rise against other currencies.
Oil is on the rise again
Oil prices started to rise again this morning as the Middle East crisis threatens energy supply.
International benchmark Brent crude rose 3.2% to $80.24 per barrel, contributing to Monday’s 7.2% rise.
Confusion remains over the navigation situation in the Strait of Hormuz after a general in Iran’s Revolutionary Guard threatened to “burn any ship” that tries to navigate the waterway, a vital route for oil and gas shipments.
However, according to Fox News, US Central Command said the strait, through which one-fifth of global oil and gas transportation passes, was not closed.
But major marine insurers canceled war risk coverage for ships operating in the Gulf, increasing freight costs and deterring shipping companies from transiting the strait.
Economists say Rachel Reeves’ plans could be disrupted by conflict in the Middle East
Heather Stewart
Rising global energy prices as a result of the growing Middle East conflict will jeopardize the plan to beat inflation and revive growth, economists have warned, as Rachel Reeves prepares to release her spring forecast today.
Responding to the latest forecasts from the independent Office for Budget Responsibility (OBR), the chancellor will insist he “has the right economic plan for our country in a world that is becoming more uncertain”.
The new forecasts are expected to show that public finances are moving in the right direction; The £22bn fiscal buffer he left himself with in breach of fiscal rules in the November budget has changed little.
However, experts said OBR forecasts may soon become obsolete if Monday’s rise in oil and gas prices is prolonged.
Asia-Pacific shares fall again
Asia-Pacific stock markets fell again today as the Middle East crisis continued to alarm investors.
in Tokyo, Nikkei 225 While the index fell by 3 percent, China’s CSI 300 The index fell 1.5 percent.
In South Korea, where the stock market was closed yesterday, KOSPI The index lost almost 8% of its value.
İpek Özkardeskayasenior analyst swiss quotesays:
Geopolitical risks are increasing – does not alleviate. Volatility is rising, along with trade and geopolitical uncertainty, and renewed inflation risk could tighten global financial conditions.
ECB’s chief economist: Prolonged Iran war could cause inflation ‘to rise’
A prolonged war in the Middle East and a persistent decline in oil and gas supplies from the region could lead to a “significant increase” in inflation, the European Central Bank’s chief economist has warned.
Philip Lane he told the Financial Times He stated that “the increase in energy prices puts upward pressure on inflation, especially in the near term.”
Lane He noted that the impact would depend on “the breadth and duration of the conflict,” adding:
“The impact will be even greater if it also leads to a re-pricing of risk in financial markets.”
Introduction: Reeves to respond to spring predictions after oil and gas prices rise
Good morning.
“Events, my dear son, events.” Rachel reeves may have (probably apocryphal, often quoted) Harold Macmillan’s wisdom is top of mind today as we respond to the latest official assessment of the UK economy.
In happier times, the Office for Budget Responsibility’s new Spring Forecast could bring good news to the chancellor this afternoon.
Economists predict the UK will still remain within the OBR’s fiscal forecasts, helped by a record budget surplus in January, showing inflation is on track to target.
However, the Middle East crisis means that such predictions become obsolete before they are even published, as the world faces the threat of a new energy crisis.
Yesterday, liquefied natural gas (LNG) prices lurched over 40% and oil rose over 7% after Qatar’s state energy firm halted LNG production and Saudi Arabia temporarily shut down some units of its massive Ras Tanura oil refinery following attacks by Iran.
These moves risk reigniting the cost of living crisis as the US-Israeli war against Iran intensifies.
As economists Investment to explain:
The main economic consequence of high energy prices will be increased inflation.
For example, the current level of the oil price in the UK would be: if it is protectedadd about 0.2 percentage points to headline inflation through higher oil prices; and a sustained 40% increase in natural gas prices would increase this by approximately 0.7 percentage points through higher household electricity bills.
We don’t expect major policy changes today, as the government has committed to holding only one major fiscal event in the autumn each year. That’s why it’s billed as a ‘spring forecast’ and not a ‘spring statement’.
Instead, the Chancellor is expected to insist that the government has the “right economic plan for the country” in an “even more uncertain” world.
reeves He is expected to tell MPs:
“Stability in public finances, investment in infrastructure and reform of our economy.
“Building growth not with the contribution of a few people or a few parts of the country, but with a state that does not step back, but steps up, all over Britain.”
agenda
-
08:00 GMT: Worldpanel supermarket inflation and sales figures
-
09.30 GMT: ONS data: Mergers and Acquisitions involving UK companies: October to December 2025
-
10:00 GMT: Flash forecast for eurozone inflation in February
-
12.30 GMT: Spring forecast statement from Chancellor Rachel Reeves
-
13:00 GMT (roughly): Office for Budget Responsibility’s spring forecasts published
-
14:30 GMT: Office for Budget Responsibility press conference
