Reeves begins statement on spring forecast
Chancellor Rachel Reeves is now delivering her response to the UK’s spring forecast in parliament, updating MPs on the state of the economy.
This forecast, produced by the Office for Budget Responsibility, will show the latest outlook for growth, inflation and unemployment.
They should also let economists judge whether the UK is on track to hit the chancellor’s fiscal rules.
However, the Middle East crisis – and the surge in oil and gas prices this week – mean such forecasts are probably already out of date even before they’re published (once the chancellor finishes speaking).
Today was meant to be a non-event, as the government has committed to holding just one major fiscal event each year in the autumn; we’re not expecting any major policy changes….
Reeves is giving statement with a backdrop of tumbling financial markets. The UK’s FTSE 100 share index is currently down 2.5%, on track for its worst day since Donald Trump launched his trade war last April.
And disappointingly for the chancellor, the City has slashed its bets on an interest rate cut this month – it’s now just a 22% chance…..
Updated at 07.35 EST
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Reeves reminds MPs that there have been six cuts to UK interest rates since the last general election.
[True, but the chances of a 7th soon have tumbled today].
Turning to the OBR’s new forecasts, Reeves says they show that the government’s plan is the right one.
He insists:
double quotation markInflation is down, borrowing is down, living standards are up and the economy is growing.
She then criticises the previous government for letting inflation to skyrocket over 11% (after the Ukraine war drove up the cost of living), saying the last parliament was the first one where people were poorer at the end than the beginning.
ShareReeves: in regular contact with Bank of England governor
Reeves then reassures MPs that she is in “regular contact” with the governor of the Bank of England, with her international counterparts, and with key sectors who are affected by the Middle East crisis – including the maritime sector.
ShareReeves: Economic plan is “even more important” given Middle East crisis
Rachel Reeves begins by telling MPs that the government has “the right economic plan for the country”, triggering a outburst of noise in the Commons.
The chancellor says this plan is “even more important” in a world that has become “yet more uncertain” in the last few days.
Given the unfolding conflict in Iran and the Middle East, Reeves says it is “incumbent on me” to chart a course through that uncertainty, secure the economy against shocks and protect families from the turbulence beyond our borders.
ShareReeves begins statement on spring forecast
Chancellor Rachel Reeves is now delivering her response to the UK’s spring forecast in parliament, updating MPs on the state of the economy.
This forecast, produced by the Office for Budget Responsibility, will show the latest outlook for growth, inflation and unemployment.
They should also let economists judge whether the UK is on track to hit the chancellor’s fiscal rules.
However, the Middle East crisis – and the surge in oil and gas prices this week – mean such forecasts are probably already out of date even before they’re published (once the chancellor finishes speaking).
Today was meant to be a non-event, as the government has committed to holding just one major fiscal event each year in the autumn; we’re not expecting any major policy changes….
Reeves is giving statement with a backdrop of tumbling financial markets. The UK’s FTSE 100 share index is currently down 2.5%, on track for its worst day since Donald Trump launched his trade war last April.
And disappointingly for the chancellor, the City has slashed its bets on an interest rate cut this month – it’s now just a 22% chance…..
Updated at 07.35 EST
Rachel Reeves, and Sir Keir Starmer, have taken their seats in the House of Commons now, where Foreign Office questions are taking place.
Our Politics Live blog has all the key developments:
Share Photograph: Kin Cheung/AP
Rachel Reeves has now left 11 Downing Street to head to parliament, to deliver her response to the OBR’s Spring Economic Forecast (which will be published after she speaks).
We’re not expecting the chancellor to produce any rabbits today, when she responds to the OBR’s economic forecasts.
But a fox has been sighted – running past the 10 Downing Street door before Rachel Reeves headed to parliament to deliver her response to the spring forecasts.
Photograph: Kin Cheung/APShare
Airline stocks are falling sharply again, as the travel industry tries to adjust to the shutdown of Gulf airspace.
British Airways’ parent company, IAG, are down 6.8% today, while Air France has lost 6.9% and Lufthansa has dropped by 4.4%.
Low-cost airlines are under pressure too; Wizz Air is down 5.5% while Ryanair has lost 2.9%.
The unprecedented disruption to all three major hubs in the Middle East – Dubai, Abu Dhabi and Doha – has created massive disruption for passengers:
Chris Beauchamp, chief market analyst at IG, says:
double quotation mark“The widening war in the Middle East continues to be a catastrophe for the international flag carriers, whose key business routes to the Middle East are now all but off limits until the conflict winds down.
Budget airlines have been less affected for the moment, but with the spectre of inflation rising once more consumers are going to start worrying about holiday spending in coming months.
If the conflict ends in a reasonable time frame then the hit to share prices will be temporary, but if damage to oil infrastructure intensifies and prices go much further then it will take much more time before earnings recover.”
Share
Lisa O’Carroll
Business secretary Peter Kyle has asked all businesses who have operations in the middle east to register their staff with the local embassies.
He told a conference of manufacturing interests in London on Tuesday that the government would be partnering with Make UK, the trade organisation, “in the coming days” to help navigate the current conflict.
Kyle told the Make UK conference:
double quotation mark“My department is working across government to ensure that you get the right guidance and the right tools…
We also want to manage any disruption and trade in the region and also supply chains across the region and back here my department is working flat out on doing this”.
ShareBrent crude oil at 18-month high
The oil price is now trading at its highest level in 18 months.
Brent crude has climbed by over 7% this morning, to a high of $83.47 a barrel, adding to Monday’s 7.2% rise.
That’s its highest level since July 2024.
The primary impact of the conflict in the Middle East is being felt in energy markets, points out Patrick Farrell, group chief investment officer at wealth manager Charles Stanley, adding:
double quotation markAttention has also turned to the Strait of Hormuz – a critical maritime chokepoint through which 20%–30% of global oil and liquefied natural gas (LNG) shipments pass. While Iran has not formally closed the waterway, vessels have reported warnings from Iranian forces, and several tanker operators have temporarily paused shipments as a precaution. These developments naturally raise questions about global energy prices, inflation, and market volatility.
ShareThe floor of the New York Stock Exchange yesterday Photograph: Brendan McDermid/Reuters
Wall Street is set for losses when trading begins in three and a half hours.
The futures market is signaling that the S&P 500 share index could be down 1.75%, with the Dow Jones industrial average on track for a 1.66% drop.
Tom Knowles
Foreign companies bought up £27.4bn worth of UK companies in the final quarter of 2025, the largest amount in four years, according to the Office for National Statistics.
UK firms have become an attractive target for foreign investors who are capitalising on cheap valuations, amid a wider uptick in global dealmaking.
The ONS said the £27.4bn figure was the highest since the second quarter of 2021 and £19.8bn more than the previous quarter, due to the number of deals worth more than £1bn.
The total was 16 times bigger than the £1.7bn of outward deals – British firms buying foreign businesses – that occurred over the same period. The value of domestic mergers and acquisitions (M&A), in which UK companies acquire other domestic firms, was also low at £1.8bn in the final quarter of 2025, some £5.3bn less than the previous quarter.
The ONS said a notable foreign acquisition of a UK company was the US firm Doordash buying Deliveroo for £2.9bn.
Others big deals have included the British industrial group Spectris being bought for £4.8bn by the US private equity group KKR and the professional services company JTC being acquired by the private equity firm Permira for £2.7bn.
While the value of foreign takeovers increased, the total number of M&A deals fell slightly, reaching 444 in the final quarter of 2025, down 53 from the previous year.
The BBC’s economics editor, Faisal Islam, points out that the gas price is now much higher than the OBR assumed in its new forecasts, to be released in less than three hours.
That could be ‘problematic’ for July’s energy price cap – the next time that the cap on UK energy bills will be set.
Not great.
The UK gas price has gone up another 40% this morning… the per thermal price is now 150p… which does get to the sustained painful levels though not the actual peak seen in Russia- Ukraine crisis.
For reference the OBR assumption at the moment likely to be confirmed… pic.twitter.com/D98I1VSRF6
— Faisal Islam (@faisalislam) March 3, 2026Share
Updated at 05.42 EST
The pan-European Stoxx 600 share index is continuing to slide, down 3% today.
ShareLondon stock markets hitting new lows
The rout in London’s stock market is turning into quite a slump.
The FTSE 100 share index has now lost 303 points, or 2.8% of its value, to 10,475 points – well away from last week’s record high of 10,934 points.
Airlines, such as IAG (-6%) and easyJet (-5.1%), are among the top fallers, hit by higher oil prices and disruption to flights in the Middle East.
The smaller FTSE 250 index, which tracks medium-sized companies, has lost 2.9% this morning.
Overall, London is firmly on track for its worst day since last April, when Trump’s trade war spooked markets.
Updated at 05.30 EST
Petrol retailers urge Reeves to abandon fuel duty increases
Petrol retailers are warning that prices at the pumps will have to rise, due to the jump in crude oil prices.
Gordon Balmer, executive director of the Petrol Retailers Association, says:
double quotation mark“The conflict in the Middle East has increased the wholesale cost of petrol and diesel, which will mean pump prices will have to go up. Rising fuel prices hurt the economy in the form of higher inflation, impacting already hard-pressed household budgets.
To help motorists and businesses, I am today writing to the Chancellor urging her to abandon the planned fuel duty increases.”
Rachel Reeves announced last year that the long-held discount in fuel duty would be scrapped from September. Prices are set to rise by 1p a litre, followed by two increases of 2p each in subsequent years.
Cancelling that rise would leave the chancellor with a shortfall in her revenue forecasts, and I imagine she would rather wait until nearer the autumn to weigh up the situation….