6 Spring Forecast | 3 March 2026 Unemployment The better outlook for inflation may also be due in part to a gloomier projection for unemployment, which the OBR now sees as averaging 5.3% in 2026, against the 4.9% which it projected back in November 2025. Unemployment stays above those previous EFO levels until 2029, by which time it is projected to have fallen back down to 4.2%, marginally below where it was in 2024. Fiscal headroom Fiscal headroom, which caused so much anxiety for the Chancellor a year ago, barely received a mention in her speech. The ‘stability rule’ headroom – the extent to which the current budget is projected to be in surplus by 2029/30 – rose from £21.7 billion to £23.6 billion. The increase was the result of a mix of factors, including: ● Revisions to the OBR’s assumptions, such as on interest rates. ● Buoyant tax receipts, visible in the record £30.4 billion January surplus recently reported by the Treasury. ● Increased spending on special educational needs and disabilities (SEND), averaging £4.2 billion a year between 2028/29 and 2030/31. ● Other increased spending, such as the cost of rejoining the Erasmus programme. ● The costs of U-turns on IHT reliefs and business rates for pubs and live music venues. For all the attention these received, the loss of revenue is estimated to be an average £0.1 billion a year for each.
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