NEW: Reform UK's Welsh manifesto leans on assumed efficiencies and cuts to spending it deems wasteful or inappropriate to fund proposed tax cuts and spending priorities.
📗 Read our immediate response to Reform UK’s Welsh manifesto here: ifs.org.uk/articles/ini...
There's lots of uncertainty about unemployment rise - OBR has consistently forecast it to come down quickly, but Bank of England suggest higher unemployment could be sustained for a few years.
This is v important for the public finances - sustained higher unemployment could hit borrowing hard.
The Spring Forecast confirmed that the Spending Review next year looks tough. Plans are currently for departmental spending to grow by just 0.9% per year on average in real terms in the next Spending Review period, much slower than planned for the first part of the parliament.
NEW PODCAST: The Spring Forecast explained
@helenmiller.bsky.social, @benzaranko.bsky.social and @beeboileau.bsky.social discuss the Spring Forecast. We cover rising energy prices and what the big forecast uncertainties mean for government spending plans.
🎧 Listen here: ifs.org.uk/articles/spr...
This is a really key point from Ben. The recent debate has focused so much on how the govt can make the numbers add up to get a forecast current budget surplus.
But a forecast budget surplus is not the same as actually running a budget surplus - delivering this will be the real challenge.
The Spring Forecast had a higher revenue forecast, driven mainly by higher equity prices (up 8% between forecasts) adding £9bn extra receipts in 2030/31.
This is good news - but equities move regularly: given global volatility, there’s a risk higher forecast could be temporary.
"There's still lots of work to do on the public finances."
🖥️ Watch IFS Director @helenmiller.bsky.social's assessment of the Chancellor's Spring Statement on BBC Politics Live yesterday: www.youtube.com/watch?v=dZTl...
Have your questions answered on the Spring Statement at our Spring Forecast Q&A now – add them here: app.sli.do/event/2mbWSF...
📊 @maxwarner.bsky.social presents on the risks to the public finances when it comes to government policy choices.
🖥️ Watch our Spring Forecast analysis live here: youtube.com/watch?v=xUzq...
@nickridpath.bsky.social presents on the big picture around the Spring Forecast: three months of relative post-Budget calm, but highlighting a range of risks going forward.
Watch our Spring Forecast analysis live here: youtube.com/watch?v=xUzq...
“The Chancellor really does deserve credit for avoiding the temptation to turn the Spring Forecast into a fiscal event and make new policy announcements yesterday,” says @helenmiller.bsky.social
Today’s event is an opportunity “to step back and think about the big picture.”
Watch our Spring Forecast analysis here: www.youtube.com/watch?v=xUzq...
“Finally, the stock market has been good recently, rising 8% since the last forecast. But as we’ve seen recently, these stock market gains can be ephemeral. With rising shares of tax revenues coming from capital gains tax, this leaves us more exposed to asset price volatility.”
“A second risk relates to the fall in net migration. The OBR have revised down their forecast for net migration on the basis of new estimates suggesting more people are leaving the UK than was previously thought.”
“Firstly, rising unemployment. If what we’re seeing is a more structural change in the labour market, and the UK should now expect higher levels of unemployment as standard, the OBR’s numbers could end up looking too optimistic.”
“There are always risks to economic forecasts – the new OBR forecasts highlighted three that could materialise in the forecasts that will underlie the Budget in the autumn:”
@helenmiller.bsky.social outlines the risks that could affect the forecasts underpinning this year's Budget 🧵:
“It is much easier to say that borrowing will be cut than to actually cut it,” says @helenmiller.bsky.social
“The number of U-turns we’ve already seen from this government does not inspire confidence.”
Watch our Spring Forecast analysis live here: youtube.com/watch?v=xUzq...
The government’s plan to reduce borrowing sharply over the rest of this parliament “is predicated on them being able to deliver taxes rises and restrained spending growth in the run up to the general election," warns @helenmiller.bsky.social
"Some scepticism about that is warranted.”
🎙️@helenmiller.bsky.social: “The Chancellor was keen to highlight that growth in incomes is forecast to be stronger than in the last parliament.
"But that is a low bar indeed, given that we saw the worst parliament for growth in household incomes on record.”
youtube.com/watch?v=xUzq...
“If we do see a prolonged period of higher energy prices, there will undoubtedly be calls for the government to step in to provide financial support to households.
While there can obviously be benefits to this, protecting household incomes in this way is not costless.” – @helenmiller.bsky.social
"Higher oil and gas prices and more economic uncertainty would drag on economic growth. Disposable incomes would fall as inflation rises. Higher inflation would likely mean higher interest rates."
@helenmiller.bsky.social on the potential economic consequences of war in the Middle East.
The government plans to reduce government borrowing by 2.5% of GDP over the next four years – a sizeable fiscal consolidation.
The question is now one of delivery. And past experience clearly shows that promising lower borrowing is easier than delivering lower borrowing.
STARTING NOW: Spring Forecast 2026: IFS analysis
We present our overnight analysis of yesterday’s Spring Forecast, starting with IFS Director @helenmiller.bsky.social's opening remarks:
🖥️ Watch here: www.youtube.com/watch?v=xUzq...
❓️ Ask questions here: app.sli.do/event/2mbWSF...
We at @theifs.bsky.social will be presenting our overnight analysis of the Spring Forecast from 10:30am. @nickridpath.bsky.social and I will present on the government's plans, the risks to their delivery and the broader UK fiscal position. You can watch online here: ifs.org.uk/events/sprin...
We'll present our detailed analysis of the Spring Forecast at our online event tomorrow morning, starting at 10:30am.
🖥️ Register to attend here: ifs.org.uk/events/sprin...
NEW: The Welsh Conservatives’ manifesto proposes reductions to three of Wales’s devolved taxes, but ‘lacks a credible plan for where […] savings will come from.’
📗 Read our immediate response to the Welsh Conservatives’ manifesto here: ifs.org.uk/articles/ini...
NEW: “Today’s Spring Forecast did what it said on the tin… there was blissfully little speculation, and no tweaking tax or spending policies on the day. To her credit, she stayed her hand.” – @helenmiller.bsky.social
📗Read our response to the Spring Forecast here: ifs.org.uk/articles/spr...
The OBR's central unemployment scenario has it rising to a little over 5 per cent then falling swiftly back. Bottom left panel has a scenario where (due to either technological displacement or higher labour costs) there's a structural increase in unemployment. One to keep an eye on in months ahead.
The OBR has revised its annual net migration forecast down by 50-100k, with a small negative impact on forecast tax revenues.
If new ONS data for this year shows lower immigration, the OBR could further reduce their net migration assumption, with larger effects on tax revenues.
“The big picture is that the public finances are in a vulnerable place, where lots of big challenges are coming along – the government is going to have to make choices on about what to prioritise.”
@helenmiller.bsky.social speaks to @sophyridge.bsky.social about today’s #SpringStatement.
