Spring Statement: Why there's a silver lining to the cloud of doom hanging over Labour
The UK is still one of the wealthiest countries in the world and its economic foundations are fundamentally strong
While polling strongly suggests it’s all over bar the shouting for Anas Sarwar’s hopes of ousting the SNP and Keir Starmer’s fortunes look equally bleak, Labour itself has some grounds for optimism, even as it recovers from a damaging by-election defeat in Gorton and Denton.
There are Labour MPs who insist Starmer has not been getting the credit for the good things he has done, but the Prime Minister has now been unpopular for so long that he may never be able to remove the taint, whatever happens.
With his party heading for big defeats in the Scottish, Welsh and English local elections in May, that may well be the moment when his party decides enough is enough.
Earnings growing faster than inflation
However, Chancellor Rachel Reeves, who will deliver her Spring Statement on Tuesday, has been striking a cautiously optimistic note of late. Asked if she saw any “green shoots” of recovery, she ventured she was “beginning to see the economy turning a corner”.
This is not just political spin. Inflation has fallen to 3 per cent – still above the 2 per cent target but better than it was but below the annual growth in weekly earnings, which hit 4.2 per cent in the last three months of 2025. These figures mean the cost-of-living crisis should be easing. Furthermore, the government’s record £30.4 billion budget surplus in January gives Reeves a bit more money to play with.
On the downside, unemployment is now 5.2 per cent, its highest level since 2021, while GDP virtually flatlined in the last quarter of 2025, growing by just 0.1 per cent, although the figure for the year was 1.3 per cent.
An economic crossroads
The economy stands at a crossroads, not doing well or particularly badly. If Labour is able to get things moving in the right direction, under a fresh, vibrant new leader, public perceptions could start to change.
The Spring Statement is thankfully expected to be a low-key affair. A period of calm and stability would be welcomed by many in business.
If the Chancellor can deliver that, while easing some of the pain caused to business by her Budgets, the country might just find itself peeking around that “corner” with her at a brighter future ahead.
The UK is still one of the wealthiest countries in the world and its economic foundations are fundamentally strong. If Reeves manages to unleash its potential, Labour might not be done yet.
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