Yesterday (3 March 2026) the Chancellor delivered the Spring Forecast alongside the Office for Budget Responsibility’s (OBR) updated Economic and Fiscal Outlook.

This was primarily an update on the outlook, rather than a major “new measures” fiscal event. Several commentators noted it was deliberately low key, with limited new policy content.

Key numbers at a glance

Where we are now (latest official data)

• Inflation (CPI): 3.0% in the 12 months to January 2026 (down from 3.4% in December 2025).

• GDP: UK output grew by 0.1% in Q4 2025 (Oct to Dec), and was 1.0% higher than a year earlier.

• Unemployment: 5.1% (Sep to Nov 2025 estimate).

• Bank Rate: 3.75% (held at the February 2026 decision).

What the OBR is forecasting (headline points)

• Real GDP growth: 1.1% in 2026 (down from 1.4% previously), with average growth of 1.6% from 2027 to 2030.

• Inflation: external summaries of the OBR outlook point to inflation easing to around 2.3% in 2026 and 2.0% from 2027 onwards (subject to risks, including energy prices).

• Labour market: the OBR expects unemployment to be higher in the near term (with reports of a peak around 5.3% during 2026, then falling later in the forecast period).

• Public finances: OBR tables show public sector net borrowing falling from 4.3% of GDP in 2025-26 to 1.8% by 2029-30 (and 1.6% in 2030-31).

• Tax take trend: OBR receipts tables show National Accounts taxes rising to 38.5% of GDP by 2030-31 (a gradual increase across the forecast period).

What this could mean for SMEs in Yorkshire

1. Demand may stay “steady but cautious” in the near term
   With growth forecast to be modest in 2026, many SMEs may continue to see customers and clients taking longer to commit, negotiating harder on price, or favouring shorter contracts.
   Practical response: keep your pipeline and conversion metrics under review, and stress test sales assumptions in your budgets.

2. Inflation is easing, but costs still need managing
   Inflation has come down from late 2025, but the latest official reading is still above the 2% target.
   Practical response:

   1. re-check pricing (especially where you have annual renewals or long contracts)

   2. watch wage and supplier renewals, and build in contingencies where margins are tight

3. Interest rates are lower than their peak, but still matter for cash flow
   Bank Rate is currently 3.75%.
   The OBR forecast is conditioned on market expectations that rates could fall further in 2026 before edging up later in the forecast horizon.
   Practical response: if you have borrowing, consider whether your mix of fixed vs variable is still right, and whether refinancing timelines need bringing forward.

4. Hiring conditions may loosen, but skills remain a constraint
   Official data shows unemployment has risen compared with a year ago, and the OBR expects a weaker labour market in the near term.
   Practical response: this can help with recruitment in some roles, but Yorkshire employers still often face skills bottlenecks. Plan recruitment early for specialist roles and protect training capacity where possible.

5. Plan on tax staying a key part of the landscape
   OBR projections imply a gradually rising tax take as a share of GDP over the medium term.
   Practical response: for owner-managed businesses, it is worth revisiting remuneration strategy (salary/dividends), allowances, and the timing of profits and investment decisions as part of normal year-round planning.