People will be £1,000 better off a year by the next election, Reeves announces

Rachel Reeves told the Commons that people will be £1,000 better off a year by the next election - which is expected to be in 2029.

She told the Commons: “I can confirm that GDP per person is set to grow more than was expected in the autumn, with growth of 5.6% over the course of this parliament…

“And by the next election, after accounting for inflation, people are forecast to be £1,000 better off per year. We promised change and we are delivering that change.”

Read more: Budget watchdog downgrades growth forecast for 2026 as Reeves defends plan

Read more: Rachel Reeves to insist her economic plan is 'right for Britain' at Spring Statement

Despite an insistence Britain's economy is on the up, the Office for Budget Responsibility indicated gross domestic product will increase by 1.1% in 2026, down from the 1.4% it forecast in November.

However, the watchdog upgraded its forecasts for 2027 and 2028 from 1.5% to 1.6%.

Updating MPs on the forecasts in her spring statement, against the backdrop of the war in the Middle East, Ms Reeves said: “This Government has the right economic plan for our country, a plan that is even more important in a world that in the last few days has become yet more uncertain.”

She added: “The new forecasts from the Office for Budget Responsibility confirm that our plan is the right one – inflation is down, borrowing is down, living standards are up and the economy is growing.”

Ms Reeves pinned Britain's faltering economy on 14 years of Conservative rule, putting special emphasis on Liz Truss' disastrous Mini Budget.

She said: “Stability is the single most important precondition for economic growth, that is why we have committed to a single major fiscal event each year, limiting major policy changes to the budget and giving businesses and households the certainty they need.

“Today, the new forecasts from the Office for Budget Responsibility confirm that our plan is the right one: inflation is down, borrowing is down, living standards are up, and the economy is growing.

“This Government has restored economic stability. The previous government let inflation skyrocket to over 11%, stoked interest rates to 15-year highs, and delivered the first Parliament on record where people were poorer at the end than they were at the start.

“I recognise the impact that had on families. We promised change at the election, and I understand the responsibility on me to deliver that change. I know that the question people will ask themselves at the next general election is this: are me and my family better off? I am determined that the answer will be yes.”

Referencing rising unemployment, which currently stands at a five-year high, Ms Reeves said it will peak later this year before going down.

The Chancellor told the Commons: “I know that the economy is not yet working for everyone and that the deep economic scars left by the party opposite (the Conservatives) and their mates in Reform are still blighting the lives of too many people.

“In today’s forecasts, unemployment is set to peak later this year and then fall in every year of the forecast period, ending the forecast period at 4.1%, lower than it was at the start of the Parliament, but young people in particular are still suffering from the aftermath of years of Tory mismanagement.

“In the last five years of the previous government, the number of young people not in education, employment or training (Neet) increased by 113,000, the number of inactive people reached record highs under their government, and over the last decade, apprenticeship starts by young people fell by 40%.

“This Government will not leave an entire generation of young people behind – we are already taking action with additional investment to reform apprenticeships to prioritise young people, and through the £820 million youth guarantee, providing young people with employment support and the guaranteed job.

“And in the coming weeks, I will set out more reforms to undo the Tory legacy of neglect and give young people the support and the opportunity that they deserve.”

She insisted her Government are the only ones who can lead Britain's economy to safety amidst an "uncertain" geopolitical backdrop.

“In the face of global uncertainty, we beat the forecast last year. In the year ahead, the choices that we are making give me confidence that we will beat them again," she said.

“And in the year ahead, more of the choices that we have already made will come into effect – discounts on business energy costs, trade deals with India, the US and the EU, reforms to back our entrepreneurs, investments in our infrastructure, skills funding for further education and more planning reforms.

“Progress – opposed by the Conservatives, opposed by Reform, opposed by the Liberal Democrats, and opposed by the Green Party too, because it is Labour, and only Labour, that has the right plan for our country.

“Our plan for growth is grounded in a profound rejection of the failed economic dogmas of the past, the trickle-down, trickle-out thinking that produced ever diminishing returns for working people.”

The Chancellor said she will soon set out "three major choices" that will determine the country's economic future.

She said: “In my second Mais lecture in two weeks’ time, I will set out three major choices that will determine the course of our economy into the future.

“To go further in strengthening our global relationships, breaking down trade barriers and deepening alliances with our European partners for a more secure and connected economy.

“To go further in backing innovation and harnessing the power of AI, so that entrepreneurs and innovators thrive here in Britain and so that working people reap the rewards.

“And to go further in transforming our economic geography, so that we can build growth on a broad and stable basis, spreading opportunity and unlocking opportunity in every part of Britain.”

Today's statement “bought the Government time” which it must now use including by broadening industrial strategy beyond energy into defence and advanced manufacturing, the Institute for Public Policy Research said.

Harry Quilter-Pinner, executive director at the think tank, said: “The spring statement delivered what many expected: a slight adjustment to the economic forecast, not a major fiscal reset.

“With less than 100 days since the last event, there were no dramatic revisions, and the Chancellor’s decision to double headroom has done its job, cushioning small forecast changes without forcing tax rises or spending cuts.

“But lower net migration poses a medium-term risk to public finances, while renewed conflict in the Middle East risks pushing up energy prices and adding to inflationary strain on households and businesses.

“The real test now is not short-term headroom but building on the economic momentum. The spring statement has bought the Government time, it must now use it.

“That means focusing on broadening industrial strategy beyond energy into defence and advanced manufacturing, and doubling down on a ‘war on bills’ to tackle the cost-of-living crisis.”

Tory shadow chancellor Mel Stride branded today's announcement a “surrender statement”, as heaccused the Government of giving up on the British people.

He said: “Is that it? What utter complacency, a Chancellor in denial. She speaks of stability, what planet is (the Chancellor) on?

“She has lurched from putting up taxes to destroying growth, to destroying headroom, to coming back to putting up more taxes, more growth destroyed. Round and round we go, like a fiscal twister ripping up everything in its path.

“As our economy bleeds out, what does (the Chancellor) do? She comes to this house with nothing to say and with no plan, unless of course doing nothing is a cunning plan to avoid those u-turns further down the line.”

Sir Mel added: “She is weak. She has even stripped the OBR of its ability to assess whether she is meeting her fiscal targets. So, let it be remembered that at this time in this chamber, this weak and chaotic government gave up on the British people.“

She has nothing to say to us today. This is not a spring statement, it is a surrender statement.”