Chancellor Reeves Addresses Economic Stability Amid Conflict
Chancellor Rachel Reeves delivered the Spring Statement to the Commons, emphasizing the UK's economic stability amid escalating conflict in the Middle East. She highlighted the need for stability in public finances, referencing downgraded growth forecasts from the Bank of England, which now predicts GDP growth of 0.9% for 2026. While opposition parties called for more decisive action, Reeves maintained that her government's policies have led to falling inflation and interest rates.
UK to Allow US Use of Bases for Defensive Strikes
Sir Keir Starmer, the UK Prime Minister, announced that the UK has agreed to a US request to use British military bases for 'defensive' strikes on Iranian missile sites, specifically at RAF Fairford and Diego Garcia. Starmer emphasized that the UK will not participate in offensive actions against Iran, citing the need to protect British lives and allies in the region, while also publishing legal advice to support the decision. The announcement follows increased tensions after Iranian attacks on US interests, prompting calls for a parliamentary vote on the use of UK bases.
Chancellor Delays Minimum Wage Equalization for Young Workers
Chancellor Rachel Reeves announced a delay in plans to equalize the minimum wage for workers aged 18 to 20, reversing a previous Labour manifesto commitment. The Low Pay Commission, which was tasked with this initiative, has been instructed that equalization is not required until the next decade. The minimum wage for 18-20-year-olds will still increase by 8.5% to £10.85 next month, while the rate for those aged 21 and above will rise to £12.71.
Investors Shift Expectations on Bank of England Rate Cut
Investors have adjusted their expectations regarding a potential interest rate cut by the Bank of England in March, influenced by rising oil and gas prices that are raising inflation concerns. The Bank's Monetary Policy Committee (MPC) maintained the interest rate at 3.75% during its February meeting, with a split vote reflecting ongoing debates about monetary policy direction. Current inflation stands at 3.0% as of January 2026, with forecasts suggesting a decline to around 2% by mid-2026.
