Spring Statement 2026: What the Chancellor's Update Means for Your Money

The headline from the Office for Budget Responsibility is a downgrade to near-term growth and a modest upgrade further out. The OBR now expects GDP to grow by 1.1% in 2026, down from the 1.4% forecast at the November Budget. Growth is then expected to pick up to 1.6% in both 2027 and 2028, slightly above the 1.5% forecast in autumn.

For households, slower growth in 2026 means the jobs market is likely to remain soft. Unemployment hit 5.2% in the three months to December 2025 — the highest rate in nearly five years — and the OBR expects it to peak later this year before gradually falling. Wage growth, while still running above inflation at 4.2% excluding bonuses, has been slowing.

The silver lining is that GDP per capita — a measure of living standards — is now expected to grow by 5.6% over this parliament, which is an improvement on the autumn forecast. But that is cold comfort if your energy bills are about to rise again.

The most important personal finance news from this Spring Statement is what was not announced. There were no changes to income tax rates or thresholds. The personal allowance remains frozen at £12,570, the basic rate band at £37,700, and the higher rate threshold at £50,270. These thresholds have been frozen since 2021/22, and the freeze is scheduled to continue until at least 2027/28.

This matters because fiscal drag — the process by which frozen thresholds pull more people into higher tax bands as wages rise — continues to erode take-home pay. With wages growing at 4.2%, more earners are being pulled into the higher rate band each year. The Office for Budget Responsibility has previously estimated that the freeze will bring an additional 4 million people into the income tax net by the time it ends.

There were also no changes to National Insurance thresholds, ISA allowances (the annual limit remains £20,000), pension annual allowances (£60,000), or capital gains tax rates. For most people, the 2025/26 tax year will end on 5 April exactly as it started. If you have been waiting for a policy change before making financial decisions, this Statement removes that uncertainty — the rules are staying the same. For more on current tax rates and allowances, see our dedicated hub page.

Before the Middle East crisis erupted, financial markets were pricing in an 80% chance that the Bank of England would cut its base rate at the 19 March Monetary Policy Committee meeting. By the close of trading on 3 March, that had collapsed to just 22%. The Bank of England base rate stands at 3.75% after six cuts since the general election, but the path to further reductions has suddenly become far less certain.

For mortgage holders and those looking to remortgage, this is the most consequential development of the day — not anything in the Spring Statement itself. If oil and gas prices remain elevated, inflation could prove stickier than the OBR's forecast suggests, giving the Bank of England less room to cut rates. That means variable rate mortgages stay expensive for longer, and the gap between current standard variable rates and the best fixed-rate deals may narrow.

For those on fixed rates approaching renewal, the calculation has not fundamentally changed: locking in a fixed deal still offers certainty. But the expectation that rates would fall steadily through 2026 now looks optimistic. If you are weighing up mortgage options, it may be worth securing a rate sooner rather than waiting for cuts that may not materialise.

The OBR told the Chancellor that inflation is expected to fall faster than it forecast in November — good news for savers whose real returns have been squeezed by above-target price rises. CPI inflation stood at 3.0% in January 2026, down from its peak of 11.1% in October 2022 but still above the Bank of England's 2% target.

However, the OBR's inflation forecasts do not account for the surge in oil and gas prices triggered by the Middle East crisis. European gas prices have risen by more than 40%, and Brent crude oil hit 18-month highs. If sustained, this could push up petrol, heating, and food costs — precisely the categories that hit household budgets hardest.

For savers, the picture is mixed. Higher-for-longer interest rates mean cash savings accounts continue to offer reasonable returns. But if inflation does spike again, real returns — what your savings earn after accounting for price rises — could turn negative. The personal savings allowance remains at £1,000 for basic rate taxpayers and £500 for higher rate taxpayers, so most savers will not pay tax on their interest. The key action is to ensure your cash is working as hard as possible: if you are still earning less than 4% on easy access savings, it is time to shop around.

The Chancellor reminded MPs that the government's £150 energy bill discount takes effect in April — a measure announced at the Autumn Budget. This will provide some relief as the Ofgem energy price cap changes on 1 April. But the timing could not be worse: the Iran crisis has sent wholesale gas prices soaring, raising the prospect that the October 2026 price cap could rise significantly.

For households, the immediate advice is straightforward. The April discount helps, but do not assume energy costs will keep falling. If you are on a variable tariff, check whether fixing makes sense — though fixed deals have become less competitive as wholesale prices have risen. If you are on a prepayment meter, ensure you are on the lowest available tariff.

The broader cost of living picture depends heavily on how long the Middle East disruption lasts. The Resolution Foundation warned that the conflict puts the cost of living and interest rates — the two areas the government has promoted most — at greatest risk. Petrol prices are likely to rise in the coming weeks regardless of what happens next. If you drive regularly, filling up sooner rather than later could save money.

For those on lower incomes, benefit rates will increase in April as previously scheduled. The government's inheritance tax easement for farms and changes to business rates on pubs, announced since the Budget, were confirmed in the OBR's updated calculations.

With no policy changes announced, the pension and ISA landscape remains unchanged for 2025/26 and into 2026/27. The pension annual allowance stays at £60,000, the money purchase annual allowance at £10,000, and the lifetime allowance remains abolished. The state pension triple lock, which guarantees a rise of at least the highest of inflation, earnings growth, or 2.5%, is unaffected.

For ISA savers, the £20,000 annual allowance continues unchanged. With just over a month until the 5 April deadline, this Spring Statement provides a clear signal: there is no last-minute ISA reform coming. If you have not used your 2025/26 allowance, there is no reason to wait.

For investors, the volatility in equity markets presents both risks and opportunities. The FTSE 100 dropped 2.5% on Statement day, and 10-year gilt yields rose to 4.28% as investors priced in higher inflation expectations. Gilt yields at these levels make government bonds more attractive for income-seeking investors, but also reflect higher borrowing costs for the government. The CGT annual exempt amount remains at £3,000 — well below its pre-2023 level of £12,300 — so investors should consider using it before the tax year ends. Our investing hub has more on the current landscape.

This Spring Statement confirmed that no policy changes are coming before the tax year ends. That means you have certainty about the rules — and just over a month to act. Here is a checklist of the key deadlines and actions:

Use your ISA allowance. The £20,000 limit resets on 6 April. Any unused allowance is lost forever. Even if you can only contribute a small amount, it shields future returns from tax. If you have not opened an ISA this year, a cash ISA currently offers rates of 4% or more. See our ISA guide for options.

Maximise pension contributions. The £60,000 annual allowance (or 100% of earnings, whichever is lower) resets on 6 April. Higher and additional rate taxpayers receive 40% or 45% tax relief on contributions, making pensions one of the most tax-efficient ways to save. Check our pensions hub for more detail.

Use your CGT annual exempt amount. The £3,000 annual exempt amount cannot be carried forward. If you have investments with unrealised gains, consider crystallising up to £3,000 of gains tax-free. Our tax guide explains the current rates.

Review your savings rates. With interest rates potentially staying higher for longer, make sure your cash is earning a competitive return. Easy access accounts at 4%+ are still widely available — but shop around, as rates vary enormously.

Check your loan arrangements. If you have variable rate borrowing, the prospect of rates staying higher for longer means repayment should be a priority. Consider whether consolidating debts or overpaying could save interest.

Review your bank accounts. Ensure your savings are within the £120,000 FSCS protection limit per institution. With market volatility rising, depositor protection matters.

This article is for informational purposes only and does not constitute regulated financial advice. Tax rules and allowances are subject to change. If you are unsure about your financial situation, consult a qualified independent financial adviser.