Chancellor's spring statement will be 'policy lite', but could provide interesting economic forecasts
Economists at the Fraser of Allander Institute say the OBR forecasts will be more interesting than the contents of the chancellor’s speech.
Chancellor Rachel Reeves is due to make her spring statement in the House of Commons this afternoon.
However, economists are warning the statement will be “policy lite”, and the real interest is more on what is happening outside the House of Commons.
Today’s statement is more of an update on the state of the public finances and a chance for the chancellor to outline her plans for the UK economy rather than a budget containing major policy announcements.
That being said, whatever is detailed in the statement could have an impact on borrowing and mortgage rates - if the updated forecast reinforces falling inflation and steady public finances, we could see these rates easing off.
The Office for Budget Responsibility’s (OBR) latest estimates for growth, inflation, unemployment, government spending and tax income for the next few years will also be published today alongside the forecast.
According to the experts at the Fraser of Allander Institute, this is where the real interest lies rather than in the contents of the chancellor’s speech.
Professor Mairi Spowage, director at the institute, told The Scotsman: “The main stuff for us is the updated OBR forecast, which will be produced alongside the statement seeing how expectations for the next five years have evolved since the budget in November.
“The OBR will not formally say whether the chancellor is on track because they are now only going to do that once a year but you can tell by looking at the data.
“So we are interested in looking at what the OBR says about things like unemployment, given the recent rise.
“The chancellor’s statement should be policy-lite.”
Today’s forecasts will not include details on the impact the past few days of conflict in the Middle East will have on oil prices and the economy - Professor Spowage said it is “too late in the day” to include this in the projections.
At the budget last year, the OBR came under fire for publishing its analysis before the chancellor delivered her statement in the Commons. The error led to chairman Richard Hughes resigning, so there will be extra vigilance on the publication of information today.
When it comes to Scottish priorities in today’s spring statement, Finance Secretary Shona Robison has written to the chancellor calling on her to increase funding for Holyrood and end the windfall tax on oil and gas giants.
The North Sea oil and gas industry has consistently called for the energy profits levy to be reformed immediately rather than waiting until 2030.
In a letter to the chancellor, Ms Robison said: “The consequences of your decision to retain the energy profits levy at the last autumn budget are already being felt for business confidence, jobs and investment across Scotland’s energy sector.”
She added axing the tax “would send a strong and positive signal across the energy industry, as well as to communities and workforces here in Scotland”.
Ms Robison added: “These fiscal changes must also form part of any wider plan for a just transition from oil and gas to renewables, one which protects jobs and skills and delivers a pipeline of future investment.”
Ms Reeves statement is due around midday, and either opposition leader Kemi Badenoch or shadow chancellor Mel Stride will respond.
The Scottish finance secretary will likely make a statement to the media on her view of the spring statement this afternoon.
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