On 3 March 2026, the Chancellor presented the Spring Forecast, outlining the government's economic plan to secure stability, reduce the cost of living, cut national debt and grow the economy. This official release highlights key projections from the Office for Budget Responsibility (OBR) and sets out how the government expects the economy to evolve over the coming years.
The Spring Forecast emphasises that inflation, borrowing and debt interest costs are falling, while overall investment in the economy is rising. The OBR now anticipates that inflation will return to the government's target sooner than previously expected, thanks in part to measures taken at the last Budget.
Borrowing is expected to be nearly 18 billion lower than forecast in the Autumn, with the UK's borrowing over the coming year now set to be the lowest in six years and below the G7 average for the first time in more than two decades. The government has also increased its "headroom" against fiscal rules to almost 24 billion.
While the press release does not single out specific sectors by name, it repeatedly highlights investment in infrastructure as a central pillar of the government's plan to grow the economy and improve living standards. For the construction industry which plays a central role in delivering infrastructure projects several implications follow from the forecast:
Infrastructure Spending as a Growth Lever:
The government frames investment as a driver of economic strength and long-term growth. For construction firms, this typically translates into demand for labour and materials on public sector projects such as transport upgrades, schools, hospitals and other civic work.
Stable Public Finances Could Boost Confidence:
With lower borrowing and reduced debt interest costs, the Treasury is positioning itself to maintain or increase capital spending on long-term projects. Construction activity is closely tied to government capital budgets, so fiscal stability could support continuity in contracts and planning pipelines.
Cost Pressures and Investment Decisions:
Falling inflation partly attributed to earlier measures like energy bill reductions may help ease some cost pressures in the sector. Lower inflation generally reduces upward pressure on wages and materials, potentially making investment decisions slightly more predictable for firms and clients alike.
The Spring Forecast suggests that GDP per person will grow more than expected under the previous Budget, and claims that people will be over 1,000 a year better off after inflation by the next election. These signals of broader economic progress can be positive for construction demand overall: stronger household confidence and higher real incomes often correlate with increased spending on housing and commercial activity.
Although the forecast underscores growth and stability, the government also frames its plan as preparing Britain to withstand global uncertainty. For construction, this speaks to the importance of long-term planning, risk management and adaptation to market shifts.
The Spring Forecast 2026 presents a cautiously optimistic picture of the UK economy, with lower borrowing, reduced inflation and a focus on investment. For the construction industry, these elements could combine to:
Support ongoing and future infrastructure projects.
Reduce some cost pressures linked to financing and inflation.
Foster a more stable environment for investment and planning.
However, as with any economic outlook, long-term effects depend on how forecasts translate into actual spending and private sector activity over the coming years.
