The Chancellor delivered her Spring Statement 2026 on 3^rd March 2026. The Chancellor did not announce any major tax or spending measures in the Spring Statement but did provide an update on her plans for the UK economy.

In line with the Government’s plans to have the Autumn Budget as the sole major fiscal event of the year, the Spring Statement provided an interim update on current economy and public finances as it outlines various forecasts from the Office for Budget Responsibility (OBR). The OBR’s forecasts can influence governmental decisions on whether to raise or cut future taxes and spending.

The Spring Statement emphasised stability and predictability with the focus being on updated forecasts from the OBR, trends in borrowing and debt, and progress against the Government’s fiscal rules.

The Chancellor highlighted that GDP is forecast to grow by 1.1% in 2026, 1.6% in both 2027 and 2028 and 1.5% in both 2029 and 2030. GDP per person is set to grow more than expected with a growth of 5.6% over the course of this Government. Government has said that the OBR has forecast that people will be over £1000 a year better off after inflation.

Unemployment is expected to rise further this year to 5.3% and at the Autumn Budget, the OBR forecast unemployment to rise to 4.9%.

In terms of public spending and public sector net borrowing, the Chancellor has said that the OBR shows that borrowing is set to reduce by nearly £18bn compared to Autumn. Public Sector Net Borrowing is set to fall from 4.3% this year to 3.6% next year, then 2.9% and to 1.8% in 2029-30.

For local authorities, the significance of the Spring Statement lies less in the new announcements and more in the broader fiscal context of the update. 

Local authorities are currently operating under a multi-year Local Government Finance Settlement, intended to provide greater certainty after years of single-year allocation of funding. This multi-year framework allows councils to model income and expenditure over a longer period however the structure of local government means funding still heavily relies on three main sources: government grants, council tax and business rates.

On 23 February 2026, the week prior to the Spring Statement, Government confirmed a further round of Exceptional Financial Support (EFS) for councils facing acute budget pressures. The EFS is not additional grant funding and instead provides for financial flexibility by allowing councils to treat day to day spending as longer term capital spending which is usually funded through borrowing or receipts from sales.

The Chancellor is expected to reveal more concrete policy proposals in her upcoming second Mais Lecture in two weeks’ time and is expected to set out “three major choices that will determine the course of economy into the future”.

The Institute of Government has commented that “If that lecture becomes a more policy-rich event than this statement, then Reeves should use it to set as clear a direction as possible for the government towards the autumn budget.”

How Capsticks can help

We will continue to monitor progress and provide updates as part of our Local Government newsletter.

As trusted advisors to local government organisations, Capsticks’ purpose is to deliver results that matter. We appreciate the need to deliver efficiently and cost effectively and have an in-depth understanding of the legislative and governance framework in which local authorities operate.

If you have any queries about what is discussed in this insight and the impact on your organisation, please contact Tiffany Cloynes, Rebecca Gilbert or Megan Tam to find out more about how Capsticks can help.