The UK government will deliver a Spring Statement on March 3, 2026, providing an update on the economy without assessing progress against fiscal rules. Bond investors hope for a calm speech after last year’s volatility. The Office for Budget Responsibility predicts a slight increase in economic growth to 1.4% in 2026.

For the first time, the OBR won’t assess the government’s progress against fiscal rules in the Spring Statement. This decision is seen as wise but also somewhat cynical, given previous promises of fiscal stability. The UK government may focus on incremental moves towards a balanced budget to keep yields steady.

Tax partner Charlotte Sallabank believes Chancellor Rachel Reeves will likely avoid major tax changes in the Spring Statement. Any tax increases or relief cuts may not be seen as minor, risking political backlash. Changes could focus on tax administration, anti-avoidance, and incentivizing investment based on OBR forecasts.

Bond markets anticipate a calm Spring Statement under Chancellor Reeves, potentially easing market volatility. UK bond yields have softened recently, reflecting lower inflation expectations. Analysts expect a steady announcement with no policy changes to please investors and maintain calm in bond markets.

Despite aiming to avoid market alarm, the UK government seeks to support the economy with policy certainty. GDP growth was minimal in Q4, but a £30.4 billion spending surplus in January 2026 exceeded expectations. The Treasury is strengthening the fiscal framework for one major fiscal event per year, aiming to provide stability and boost the economy. The UK government will issue a Spring Statement on March 3, 2026, with an update on the economy from the Office for Budget Responsibility. Investors may welcome a “boring and uneventful” speech after last year’s bond market volatility. It’s the highest government surplus in any month since records began in 1993.

While tax policy changes are possible, the government must avoid accusations of deploying “stealth” taxes. Falling inflation is also a boost for the chancellor, as recent data shows progress towards the Bank of England’s 2% inflation target. This has led to increased talk of a potential interest rate cut.

Read more at Morningstar UK: Will Rachel Reeves Raise Taxes? Key Questions Ahead of the Spring Statement