UK: Spring Statement seen as quiet placeholder – Deutsche Bank

Deutsche Bank’s Sanjay Raja expects the UK Spring Statement on 3 March to be a low-key update, with few new policy measures after the Autumn Budget. The Office for Budget Responsibility will refresh forecasts, with borrowing projected to undershoot and fiscal headroom to rise.

Spring Statement seen largely non event

"On the 3rd of March, the Chancellor will present an official update on the economy and public finances. Big picture, we’re not expecting any fireworks. With the Autumn Budget taking place only three months ago, we see very little in any new information."

"What will we get as part of the Spring Statement? As usual, the Office for Budget Responsibility (OBR) will present its Economic and Fiscal Outlook, complete with an economic update, details on expenditure and spending, and estimated of the various buffers against the fiscal rules."

"Almost certainly, policy measures will be thin, with policy reversals/u-turns likely to be the main feature in the Spring Statement. While there remains some speculation that the Chancellor could surprise with a sweetener or two ahead of the local elections, we think any new spending measures will be marginal - if that."

"From a borrowing perspective, the current fiscal year will include good news for the Treasury. Borrowing has, thus far, undershot the OBR's projections. With the economy holding up well - in spite of labour market weakness - favourable market conditions, we think, will result in a modest improvement to the borrowing outlook."

"There will be three key numbers to watch in the Spring Statement. First, the fiscal headroom. We see the Chancellor's fiscal headroom in 2029/30 rising on both fiscal rules, with the primary stability rule showing a surplus of GBP 25.2bn, and the secondary investment rule showing a surplus of GBP 30.6bn."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)