UK CHANCELLOR: Reeves backs right economic plan amid global volatility
UK Chancellor Rachel Reeves on Tuesday said she has no doubts in Britain’s ability to navigate the challenges the country faces as she delivered mixed news about the UK’s economic prospects.
Chancellor Rachel Reeves told MPs the government has ‘the right economic plan for our country.’
‘I am in no doubt how great the rewards will be if we stay the course,’ she added.
She said the plan is even more important in a world that has, in the past few days, ‘become more uncertain,’ noting events in the Middle East.
In an increasingly dangerous world, Reeves said she has no doubts in Britain’s ability to navigate the challenges the country faces.
She said she was proud to be the chancellor that is ‘delivering the biggest uplift in defence spending since the Cold War.’
She called her economic plan a break with ‘failed ideas of the past’ with a state that ‘steps up’ and doesn’t ‘stand-back.’
Reeves affirmed plans to move to a single fiscal event per year which she said gives businesses and households more certainty in an uncertain world.
The chancellor said forecasts from the Office for Budget Responsibility show inflation is down, borrowing is down, living standards are up and the economy is growing.
But Reeves said the OBR has lowered its growth forecast to 1.1% in 2026 from the 1.4% projection in November.
Reeves said that the downgrade to 2026 growth forecast is to reflect lower net migration.
For 2027 and 2028, the OBR forecast economic growth of 1.6%, up from 1.5% before, with growth of 1.5% pencilled in for 2029 and 2030, unchanged.
GDP per person is forecast to grow 5.6% over the course of the parliament, compared to a fall in the last parliament.
Unemployment is forecast to peak later this year and end the forecast period at 4.1%, lower than at the start of parliament.
Reeves said the OBR expects inflation to come down ‘even faster than it forecast in the Autumn’.
Keeping inflation low and stable is the ‘best way’ to support family incomes and reduce cost of living pressures, she added.
Reeves said the OBR estimates fiscal headroom has risen to £23.6 billion from the £21.7 billion forecast in November. Debt will be lower than every year in the forecast, she added.
Reeves said she will shortly outline further measures to improve economic growth.
In two weeks time, the chancellor said she will set out ‘three major choices that will determine the course of our economy into the future’.
She said this will include strengthening global relationships, including with Europe, breaking down trade barriers, and harnessing the power of AI.
Copyright 2026 Alliance News Ltd. All Rights Reserved.