Spring statement analysis – NEETs, shoots and Reeves

Tom Gillingham

Partner

On a day that was ultimately more about vibes than policy, Rachel Reeves and Keir Starmer must wish they could mute geopolitics and just be allowed to celebrate some watery spring sunshine before gathering clouds on the horizon blot it out.

The build up to the chancellor’s spring statement was characterised by a pointed lack of interest from the media and the general public. This could be a reflection on the government promise to restrict itself to one “fiscal event” (the autumn budget) a year to set out tax and spend policies, or it could be because of the sheer volume of events elsewhere.

After the negativity that’s preceded previous financial updates to the country this indifference could, perhaps, be framed as a win for Labour. The problem is, they really need this moment – however confected – to go beyond mere survival and be recognised as a turning point.

Key takeaways

There were positives, if you squinted hard enough, but some of the biggest ‘green shoots’ like falling inflation are almost entirely vulnerable to a different sort of shooting currently underway halfway across the world.

• OBR forecasts show inflation and interest rates coming down, but this now comes with a massive asterisk relating to a potential gas price shock from the latest Middle East conflict.
• Borrowing is set to reduce by nearly £18 billion compared to the autumn, with public sector net borrowing expected to fall from 4.3% this year to 3.6% next year, then 2.9%, 2.5% and 1.8% in 2029-30. Debt interest rates are also expected to fall by £4bn vs expectations for 2027.
• The same forecasts showed that wages are growing too, as were January tax receipts and the chancellor’s so-called ‘fiscal headroom’ – the self-imposed leeway within the government’s budget.
• But it’s not all rosy – GDP growth has been downgraded to 1.1% in 2026, before accelerating slightly to 1.6% in 2027 and 2028, and 1.5% in 2029 and 2030. Not exactly stellar. At the same time, the number of young people not in education, employment or training (NEETs) has risen to 957,000 (or 12.8% of all people aged 16-24). This fundamental lack of growth and potential narrowing of opportunities for young people – even set against potentially falling future unemployment towards the end of this parliament – will be felt across the country.

Opposition response

Shadow chancellor Sir Mel Stride wasn’t a fan. “She [the chancellor] speaks of stability, what planet is [she] on… this weak and chaotic government gave up on the British people.” He then tried to lead the Commons on a sort of call-and-return litany of government ‘U-turns’. The jury remains out on his effectiveness as a cheerleader. But he did at least follow up with a solid soundbite “If government debt was a government department, it would be third highest spending department.”

Opposition leader Kemi Badenoch posted on X to say: “This is a spring statement written by Chat-GPT”. If she means that as a negative, she may want to have a word with her shadow chancellor. His quip to Reeves that “This is not a Spring statement, it is a surrender statement” carried more than a little essence de AI.

Our view

For businesses, the most positive view would be this statement doesn’t materially add to the dizzying list of variables they are already contending with.

Reeves’ voice rose as she extolled the house to agree with her assessment that any deviation from her plan would lead to wrack and ruin – especially if the ‘Tories with different rosettes’ at Reform UK were in charge. Strong marks for effort, but it was am-dram endeavour at a time when most eyes are on the global stage.

Even if today carried the faintest whiff of good news on the spring breeze, the bigger question for this Labour government remains unanswered. Amidst rising Reform and Green support across the UK, is the wider public still listening?