The Chancellor has delivered her Spring Statement; staying true to her commitment to only having one ‘fiscal event’ per year, today’s statement did not include any new policy announcements.
The OBR (Office for Budget Responsibility) published its bi-annual forecast on the state of the UK’s economy after the Chancellor delivered her statement, predicting that inflation will fall to 2.3% in 2026 and then again to 2% from 2027 onwards. The OBR forecast that the 2% target for the UK inflation rate will be met in “late 2026”. This would mean the UK meets its target sooner than originally predicted following the November Budget.
“These actions government could take are critical to creating a positive climate where farmers and growers have the confidence to invest”
NFU President Tom Bradshaw
Unemployment is expected to peak at 5.3% this year according to these latest figures, and the OBR also downgraded its forecast for economic growth to 1.1%.
However, the forecast does not take into account any potential impact from the rise in energy prices triggered by the conflict in the Middle East. The OBR says its forecast “lies in the middle of a wide range of possible outcomes”, with “significant risks around it”.
“Conflict in the Middle East, which escalated as we were finalising this document, could have very significant impacts on the global and UK economies,” it says.
If increases in energy prices continue, this will have a significant impact on inflation and the Bank of England’s upcoming decision on interest rates.
Conditions for investment
In a letter to the Chancellor, NFU President Tom Bradshaw outlined several practical measures required to increase investment and productivity in the farming sector, including effective use of tax reliefs, a push for greater energy resilience and a stable policy framework to encourage investor confidence and boost economic growth.
The NFU also continues to call on the government to maintain the current reduced rates of fuel duty for red diesel.
Speaking after the forecast was published, NFU President Tom Bradshaw said: “The Spring Forecast was never expected to be a major fiscal event. However, it was still important that we wrote to the Chancellor to set out the immediate challenges facing the industry such as increases to standing charges and workforce costs, and the steps needed to boost investment and productivity in agriculture.
“Farming underpins the UK’s largest manufacturing sector – food and drink – worth £153 billion and supporting 4 million jobs. Farmers and growers are central to economic growth, but with confidence remaining devastatingly low, government must create the right conditions for investment to create resilient agricultural businesses and support domestic food security.
“As we look ahead to the Autumn Budget, it’s vital that the Chancellor recognises the full value food and farming bring to the economy.”