- FTSE 100 adds 41 points to 8,705
- UK CPI inflation cooled slightly last month
- Chancellor Rachel Reeves delivers Spring Statement
- She confirms boosts for defence and housing, £10bn ’headroom’ to be restored
3.21pm: FTSE stands out head and shoulders in global markets
The FTSE 100 has been heading higher, led by oil companies, miners and big banks.
Shell (LON:SHEL) is up 2.7% (though analysts are not 100% sure about its strategy) and BP (LON:BP) 1.5% as oil prices climb to the highest in almost a month, with Brent touching $74 a barrel.
Also within the Footsie top 20, HSBC (LON:HSBA), National Grid (LON:NG) and BAE Systems (LON:BAES) are also up over 1%, while another defence sector name Babcock (LON:BAB) is also up over 2%.
Insurers are up, with Beazley (LON:BEZG), Prudential (LON:PRU) and Hiscox (LON:HSX) on the front foot.
European stocks are still in the red, with Germany’s DAX down 0.6% and France’s CAC 40 down 0.5%, while US stocks are mostly lower, with the Dow Jones held just above flat by its oil-related names, while the S&P 500 falls 0.55% and the Nasdaq drops 1.2%.
2.37pm: Reeves still facing external challenges
Sanjay Raja, chief UK economist at Deutsche Bank (ETR:DBKGn), says the Spring Statement was "very much as expected", as a worse near-term economic outlook led to "a meaningful amount of fiscal consolidation".
As Chancellor Reeves was at pains to stress, geopolitics has shifted the near-term economic outlook for the worse, raising uncertainty and the prospect of a trade war, with inflation expected to be stickier than previously expected.
"But, today’s forecasts highlight some optimism around the medium-term path," he says, with the OBR expecting GDP growth to pick up in the coming years.
The statement centred around spending cuts, "but less than we expected", Raja says.
"From a market perspective, Chancellor Reeves returned the fiscal headroom back to where it was in her maiden Budget."
But "big challenges remain" before the autumn Budget, he adds, viewing the OBR’s productivity assumptions "unjustifiably too optimistic", which could set the stage for medium-term downgrades ahead of the Budget.
2.16pm: ISA reform consultation in the works
In statements alongside the Spring Statement, the government said it will look at options to reform individual savings accounts (ISAs) to try and encourage more people to invest.
Reeves did not announce any changes in her speech, but documents released alongside the speech revealed the government was looking at reforms, which echo reports in recent weeks and the new strategy announced by the City watchdog yesterday.
"The government is looking at options for reforms to ISAs that get the balance right between cash and equities to earn better returns for savers, boost the culture of retail investment, and support the growth mission," the documents said.
Costings in the document assumes the overall limit of £20,000 will remain in place until at least 2029/30.
1.46pm: ’No big surprises’ in the statement
The Chancellor’s fiscal statement was "a game of two halves", says market analyst Susannah Streeter at Hargreaves Lansdown (LON:HRGV).
"Reeves appeared to be on the losing side of investor sentiment with downgrades to growth this year, but scoring goals of optimism with upgrades to GDP further ahead, and forecasts for real disposable income to rise in the months to come," she adds, pursuing the sporting pun angle.
Both the FTSE 100 and FTSE 250 lost ground and then made handbrake turns in the latter half of the speech, with 10-year gilt yields also rising and then falling back as prospects for growth rose, easing the squeeze on the public finances.
"The extra defence spending will be welcomed by defence contractors but there were not any significant moves in the share prices of big names, given that much of the budget will be reserved for seed investments, startups and accommodation upgrades."
Streeter summarises the statement as containing "no big surprises... and that’s exactly what the Chancellor intended. Stability is right at the cornerstone of the government’s agenda, and she appears to have done the trick of not unnerving investors further.
"She has made it clear she’s not for turning, and won’t break her fiscal rules. It’s still not going to be easy going forward despite the wiggle room in the years to come the Office for Budget Responsibility has forecast.
"The UK is not blessed with lower debt to GDP levels like Germany, which has enabled the country into lifting its borrowing brake.
"With eyes trained on investment to propel longer-term growth, the government will still have limited room for manoeuvre to deal with incoming trade disruption.
"The hope is that UK will still be seen as a steady, if sluggish, ship in the storm brewing amid the threat of further tariffs from the US."
1.38pm: No tax policy announcements
There were no new tax policy announcements today, notes Chris Sanger, tax policy leader at EY, meaning the Chancellor kept her promise of one fiscal event a year.
He says June’s spending review could still see the Chancellor increase the headroom available within the fiscal rules following the OBR’s latest forecast.
"On tax, it was always unlikely that we’d see any further changes come out of today, particularly given that measures announced last October, such as the rise in employer National Insurance contributions, are yet to come into effect.
"However, what we may hear in the coming weeks are announcements on tax administration and simplification efforts."
These will not be policy changes, but are likely to include consultations on e-invoicing and cost sharing, he says, which have the potential to both reduce the tax gap and attract greater investment in the UK.
1.20pm: Views on Reeve’s fiscal statement
The views and comments are flooding in from the City and various sector experts.
Economist Ed Cornforth at NIESR says: "There is considerable uncertainty around whether the Chancellor’s measures will pay off, particularly as it rests on several behavioural assumptions.
"The changes to welfare are unlikely to incentivise work as much as the government states. The chancellor’s strategy is optimistic and at risk of potential benefits not panning out."
Prof Adrian Pabst, deputy director at NIESR, adds: "At a time of radical international uncertainty, the increase in defence spending is vital to strengthen both national and economic security.
"Now the task is to scale up the government’s industrial strategy and link it to greater energy security and regional regeneration."
Paul Dales, chief UK economist at Capital Economics, notes that despite Reeves saying the "world is changing", she "just tinkered with fiscal policy", which "left the impression that bigger changes lie ahead".
The reaction in financial markets has been muted, with UK year gilt yields slightly lower, and the FTSE roughly where it was earlier. The pound is down 0.5% against the dollar, maybe a bit weaker than it was earlier.
This is because the tightening in fiscal policy of £9.7 billion (0.3% of GDP) in 2029/30 relative to previous plans revealed today "is not big", says Dales.
"It reverses about 30% of the 1.0% of GDP relative loosening in policy the Chancellor put in place at last October’s Budget. And with all of the tightening taking place from 2027/28 onwards, it’s not going to significantly dampen economic growth over the next two years."
Some elements "may leave the markets feeling a little uncomfortable", he says:, including the fiscal headroom still only being £10 billion, which means "the Chancellor is just as vulnerable to adverse economic and financial market developments that could wipe out her headroom again and force her to tighten fiscal policy further in the full Budget later this year".
1.10pm: Spring Statement finishes
Possibly the best news for Reeves is that she is able to boast that the OBR has upped its growth forecast for next year and every year after.
So, while the forecast for this year has been cut to 1.0%, it jumps to 1.9% in 2026 (up from a forecast of 1.8% in the autumn), with growth of 1.8% in 2027 (from 1.5%), 1.7% in 2028 (from 1.5%) and 1.8% in 2029 (from 1.6%).
“Our economy is forecast to be larger at the end of the forecast period than forecast in October,” says Reeves.
“But this isn’t just about lines on a graph, it’s about approving people’s lives."
Households are still “feeling the pinch” after the cost of living crises in previous years, she says, when Liz Truss’s government sent interest rates surging and inflation soared.
She says the OBR now forecasts that people on average will be £500 a year better off due to changes under the government.
12.59pm: Support for GDP
Reeves says the OBR has forecasts a 54% chance that the current budget is in surplus in the target year of 2029-30, based on current policy.
She explains that the forecasts foresee fiscal measures boosting UK GDP by 0.6% in 10 years.
The OBR predicts UK housebuilding will hit 40-year high.
12.56pm: Defence technology spending
Reeves gives more detail on defence spending.
"We will spend a minimum of 10% of the Ministry of Defence’s equipment budget on new novel technologies, including drones and AI enabled technology," she says.
She mentioned a boost for advanced manufacturing production in Glasgow, Derby and Newport, creating demand for highly skilled workers and "new business opportunities for UK tech firms and startups".
She adds: "We will establish a protected budget of £400 million within the Ministry of Defence, a budget that will rise over time for UK defence innovation with a clear mandate to bring innovative technology to the front line at speed.
"And we will reform our broken defence procurement system, making it quicker, more agile and more streamlined."
12.52pm: Spending to increase less than stated at Autumn Budget
UK 10-year government bond yield holds lower as Reeves speaks, down 2.5 basis points at 4.73%.
The latest from Reeves is that day-to-day spending will be reduced by £6.1 billion in 2029/30 and will grow by average of 1.2% per year compared to 1.3% in her last Budget.
Public spending is forecast to rise to 45% of GDP next year, before declining over the remainder of the decade to 43.9% of GDP in 2029-30.
This includes changes to defence and welfare spending.
Reeves also confirms the plans to increase defence spending to 2.5% of GDP, funded by reducing overseas aid.
The Chancellor says this gives the Ministery of Defense an extra £2.2 billion next year.
Welfare spending cuts will save £4.8 billion.
12.45pm: Increasing the crackdown on tax evasion
Assuring that she is announcing no new income tax rises, the Chancellor declares that £1 billion will be raised by a crackdown on tax avoidance and tax evasion.
Reeves says normal working people are not those evading tax.
Her autumn budget contained measures to raise £6.5 billion from an avoidance and evasion crackdown by the end of the OBR forecast period.
New measures are announced today to increase this to £7.5 billion, a figure that the OBR has checked.
12.40pm: OBR forecasts
The increased global uncertainty has had effects on public finances and on the economy, Reeves says.
She reminds about the two rules she set out at the autumn Budget was the fiscal rule (balanced budget by 2029/30) and the investment rule (to drive growth, to ensure net financial debt falls by the end of the forecast period).
The Office for Budget Responsibility has forecast that growth this year will be 1.0%, half of its previous forecast.
The OBR said a £14 billion worsening in the current deficit has been forecast for 2029-30, resulting in a deficit of £4.1 billion if Reeves announced no new changes, wiping out any "headroom" for spending.
But Reeves says she will make changes to restore £9.9 billion of ‘headroom’, pretty much unchanged from the October forecast.
She says that is more than the headroom of £6.5 billion planned by the previous government.
12.35pm: Spring Statement begins
Rachel Reeves is up and delivering her Spring Statement in the House of Commons.
She starts by saying that the global economy is "more uncertain".
ow the task “is to secure Britain’s future in a world that is changing before our eyes”.
She says the situation changed when Putin invaded Ukraine, and the threats are escalating.
12.25pm: Morrisons sales update
Wm Morrison Supermarkets has reported improved sales for the past quarter.
The Bradford-based grocer, which announced 365 likely job cuts earlier this week, said sales rose 2.4% to £4 billion over the quarter to January 26.
Cost savings of £56 million were made during the quarter and with the moves announced on Monday, Morrisons has now hiked its long-term savings target from £700 million to £1 billion.
Rami Baitiéh, chief executive, says:
“Despite a challenging environment, Morrisons has made exceptional progress in a very short time and that is entirely down to the hard work, positivity, talent and customer focus of the colleagues in our stores, in our foodmaking sites and in our operations across the country.”
12.03pm: Midday markets update
The FTSE 100 has gained 16 points or 0.2% at we pass midday, while the mid-cap FTSE 250 is up 0.55%.
Ocado is now up 16%, while Ithaca Energy is up 9%.
Other mid-cap tech names Raspberry Pi (LON:RPI) and Trustpilot are up 6% and 5.3%.
Fallers on the FTSE 350 include Vistry Group (LON:VTYV), Future, ASOS (LON:ASOS), Imperial Brands (LON:IMB) and Burberry (LON:BRBY).
11.35am: Copper climbs to peak
Copper prices have hit a 10-month peak, UBS have flagged.
The metal hit US$4.58 per pound, up 1.8%, which UBS mining analysts suggested was supported by "tailwinds" of renewed speculation around President Trump’s tariffs.
Elsewhere in metals, gold rose 0.3% to US$3,053 per ounce. The analysts noted the gain was driven by safe haven demand ahead of possible tariff developments next week.
Iron ore declined 0.6% to US$103 per dry metric tonne, which was attributed to ongoing steel production cuts.
11.12am: Official house price data
UK house prices increased 4.9% to £269,000 in the 12 months to January 2025, according to a provisional estimate from the ONS.
This annual growth rate is up from 4.6% in the 12 months to December.
Average house prices increased 4.8% in England, 6% in Wales and 4.6% in Scotland.
Commenting on today’s house price data for January and rents data for February, ONS Head of Housing Market Indices Aimee North said:
“UK house price annual inflation rose again in January, for the sixth consecutive month. Within the nations and the regions, the North East showed the highest growth while London remains the region with the lowest.
“Meanwhile, rental prices annual inflation slowed again across most UK nations and regions. In England, London continues to be the region with the highest rent annual increases.”
10.42am: Could Reeves be replaced?
Bookmakers have suggested that Chancellor of the Exchequer Rachel Reeves could be out of a job within a year, as markets have not welcomed her fiscal policies so far.
“With today’s Spring Statement likely to announce further tightening of the purse strings, the coming months might prove to be a tricky period for the already under-pressure Chancellor Rachel Reeves, and we make it a 36% chance that she is no longer in position come this time next year," said William Hill spokesperson Lee Phelps.
Ahead of Reeve’s speech this afternoon, Pat McFadden was the favourite with William Hill to replace Reeves as the UK’s next finance minister, at offs of 5/2 to take over the reins, ahead of Darren Jones at 7/2, Wes Streeting at 7/1 and Ellie Reeves, sister of the Chancellor and former chair of the Labour Party, at 12/1.
10.15am: European fallers
The pan-European Euro Stoxx 600 is down 0.7%, with the leading faller being Polish video games giant CD Projekt, down 10%.
Shares dropped after the company gave an update on the timing of the next instalment of its popular Witcher series, with the premiere of ’Witcher IV’ was now scheduled for after 2026.
UK housebuilder Vistry and insurer Admiral are among the others on the fallers list.
Other fallers include tyre maker Michelin (EPA:MICP), drug makers and engineers.
9.58am: Bakkavor up on Bloomberg report on Greencore approach
Bakkavor Group PLC (LSE:BAKK) is among the risers, following a report that rival convenience food maker Greencore has lifted its bid.
Bakkavor was considering the enhanced proposal, newswire Bloomberg reported overnight, citing unnamed sources.
Neither company has commented, after Bloomberg revealed earlier this month that Greencore had made an approach.
9.37am: All about the Spring Statement
Investors are "bracing themselves" for the Spring Statement, says Dan Coatsworth, investment analyst at AJ Bell (LON:AJBA), though he noted the pound is down.
"The OBR is widely expected to downgrade its economic forecast for the country. What really matters to investors is the extent of that downgrade and the omens look bad.
"It could be a testing day for markets if chancellor Rachel Reeves delivers more bad news and is seen to be fighting a losing battle."
With sterling down 0.3% versus the dollar, he said the flipside of this is that it benefits the army of dollar earners on the FTSE 100, one reason why the UK index traded higher than European stocks today.
"Lower than expected inflation figures today and strong services PMI data earlier in the week will have been welcomed with open arms by Reeves. Sadly, these two data points are not enough to convince markets that everything is rosy with the UK," says Coatsworth.
9am: FTSE 100 flattens and European stocks in the red
In the first hour, the FTSE 100 has put on just over eight points, less than 0.1%, led by gains for retailers M&S and Next (LON:NXT).
Commodities heavyweights, including Shell, Rio Tinto (LON:RIO) and Glencore (LON:GLEN) are also supporting.
But more than half of the top 20 largest stocks are in the red, which is limiting gains.
The FTSE 250 is up 0.4%, led by strong gains for Ocado and Ithaca Energy.
European stocks are also generally lower, with the DAC and CAC 40 both down 0.6%.
8.47am: Ocado surges as bank says ’tide turning’
Ocado Group (LON:OCDO) PLC shares are top of the FTSE 350 leaderboard, surging 13% after its shares were upgraded by JPMorgan (NYSE:JPM), which sees a "turning tide" in online grocery deals.
The US bank upped its rating to ‘overweight’ from ‘neutral’, the first positive rating on the FTSE 250 group since 2018 as it sees it "now at an inflection point".
Analysts said they are revisiting the investment case and identify "several reasons to be more optimistic", including a "rising possibility" of new deals for the Ocado Solutions arm, according to its recent analysis of the global eGrocery space.
8.33am: Avon Technologies surges
One of the top risers this morning is Avon Technologies PLC (LSE:AVON), up 7% after the maker of military helmets, gas masks and scuba rebreathers upped its full-year outlook on the back of strong first-half orders and margin improvements, including from the US and Ukraine armies.
Along with the planned ramp-up of the second-generation Advanced Combat Helmet to the US Department of Defence, there were two new European NATO orders received for personal respirators for delivery to the Armed Forces of Ukraine and a joint order from two European navies for underwater rebreathers.
Overall, Avon said the additional demand will result in growth for 2025 being higher than previously expected.
8.14am: FTSE 100 inches higher at the open
The FTSE 100 has opened mostly higher, up 16 points to 8,679.6.
Retailers Kingfisher (LON:KGF), bouncing back from yesterday, and Marks & Spencer are top of the risers, followed by miners and aerospace shares.
On the FTSE 250, Vistry has fallen 6.7% on the back of its results (see below).
Next in Line, JD Wetherspoon (LON:JDW) isand Burberry are down over 2%.
7.56am: Pound falls on inflation
The market reaction to the UK CPI data has been "minimal", says market analyst Kathleen Brooks at XTB, as she feels the focus remains more on the Spring Statement later today.
The pound has dropped 0.3% versus the US dollar to $1.2908 and the bond markets are not yet open.
Brooks says she thinks that UK gilts "will also have a mild reaction" to the data.
"The bigger test for the UK bond market will be how it reacts to the Spring Statement, in particular the growth forecasts.
"We expect the OBR’s forecasts, which have a history of inaccuracy, to forecast a lower rate of growth compared to the OECD forecasts, which is one of the big problems with forecasts – they are often different.
"Even so, should weak OBR growth forecasts cause bond yields to spike, then the pound could come under pressure later today."
7.46am: Views on inflation and what it means
Some views on the UK inflation figures from economists and other City folk.
"Despite anticipation of a scaling back of government spending in today’s Spring Statement, this year’s budget is expansionary and will introduce some inflationary pressure," said Monica George Michail, associate economist at NIESR.
She forecasts CPI inflation will remain above the Bank of England’s 2% target throughout this year, driven by increased public spending, persistent wage growth and global trade fragmentation.
"We therefore think there will only be one more 25 basis point interest rate cut in 2025," she said.
Jeremy Batstone-Carr, European strategist at Raymond (NSE:RYMD) James, says the easing of CPI is "a welcome respite" but "will likely do little to ease concerns that price pressures are contained and will not hold at prevailing levels for long".
He says the BoE’s Monetary Policy Committee "will be most concerned about the notable increase in supermarket food prices, despite subdued input costs" and the MPC faces a "difficult conundrum" of deciding whether cutting interest rates to give the economy a helping hand.
Rob Wood at Pantheon Macroeconomics says inflation fell "as a sharp drop in core goods prices offset stubborn services price pressures", which "makes it fractionally easier for the MPC to cut interest rates in May, because headline inflation matched rate setters forecast, rather than overshooting as in January".
But he stresses that is very much "fractionally", as core inflation was only 10 basis points weaker than the MPC assumed.
"A bounceback next month – the March CPI data are published ahead of the MPC’s next meeting – is a good bet."
Looking ahead to March data, he says February was "the calm before the storm of annual price resets, government-set price hikes and tax rises" that are likely to boost headline CPI inflation to 3.5% in April and then to a peak of 3.7% in September, in his view.
"We continue to look for two more rate cuts this year, in May and November. The persistence of underlying inflation is increasingly shifting the risks towards the MPC cutting only once more this year. The wild card, however, is President Trump. The April 2 tariff day could crystalise downside risks to the global economy that keep the MPC wanting to ease policy."
7.40am: Vistry profits better than expected, it seems
In some company news, FTSE 250-listed housebuilder and social housing partnerships specialist Vistry Group PLC (LSE:VTY) has reported a 35% fall in adjusted pre-tax profit for last year.
The profit came in at £263.5 million, which was better than the circa-£250 million it guided to in January.
This was partly down to an adjustment to the timing of when it recognised cost adjustments from forecasting overruns in its southern division, which had a total impact of £165 million, but the net impact on 2024 profits was cut to £91.5 million from the previously expected £105 million.
CEO Greg Fitzgerald admitted it was a "challenging year" and a "disappointing financial performance", despite growth in completions and revenue, but said a "rigorous set of reviews and year end procedures" has led to no further issues on costs being identified.
7.23am: Clothing price cuts drive cooler inflation
"Inflation eased in February," said ONS chief economist Grant Fitzner. "Clothing prices, particularly for women’s clothes, was the biggest driver for this month’s fall.
"This was only partially offset by small increases, for example, from alcoholic drinks."
7.20am: UK inflation in more detail
The UK consumer price index, as mentioned below, was up 2.8% in February compared to a year earlier, which was lower than the 3.0% seen in January, and which was expected to continue.
CPI was up 0.4% month-over-month, the Office for National Statistics said, less than expected again.
Core CPI, which strips out more volatile prices such as fuel and food, rose 3.5%, which was down from 3.7% in January and lower than the 3.6% average forecast. Month-on-month, core CPI rose 0.4%.
Services industry CPI, which the Bank of England is keeping a close eye on as a gauge of the persistence of inflation, rose 5.0% as it did in January.
7.14am: FTSE 100 may get boost from inflation news
The FTSE 100 may see the buyers continue to outweigh the sellers on Tuesday after Rachel Reeves got some good news on inflation ahead of her spring statement.
Headline inflation rates fell beck to 2.8% in February, below market expectations for the consumer price index to have remained at 3% as it was in January. More on that shortly.
Futures currently see the London blue-chip index rising around six points, adding to the 25 and a bit it gained yesterday that saw it close at 8,663.8.
Overnight, Wall Street trading was cautiously positive, with the S&P 500 finishing up 0.2%, the Dow Jones flat, the tech-powered Nasdaq Composite rose 0.5% and the domestically focused small- and mid-cap Russell 2000 ended down 0.7%.
Asian markets are mixed, with the Nikkei and Hang Seng both up modestly, but Shanghai flat and India’s Sensex down slightly.
5am: What to watch on Wednesday
Chancellor Rachel Reeves may be set to provide a more wide-ranging slew of announcements in the Spring Statement than she had previously hoped...here’s 10 things to watch
Before that, traders will be digesting the UK consumer prices index and other inflation data for February.
The headline reading is expected to show CPI inflation easing to 2.9% year-over-year from 3.0% in January, but for CPI to rise 0.5% month-on-month.
Several economists, however, expect CPI to inch higher, with services sector CPI also in focus as one of the Bank of England’s key gauges of inflation persistence.
Core CPI, which excludes fuel and food prices, is seen easing to 3.6% from 3.7% on the year, and also rise 0.5% on the month.
Announcements due on 26 March:
Finals: Anpario PLC, Aptitude Software (ETR:SOWGn) Group PLC, Everyplay Group PLC, Evoke PLC (LON:EVOK), Ithaca Energy PLC (LON:ITH), Pharos Energy PLC, TruFin PLC, Vistry Group PLC
US earnings: Cintas Corpo, Paychex Inc (NASDAQ:PAYX), Dollar Tree Inc (NASDAQ:DLTR), Chewy Inc (NYSE:CHWY), Jefferies Financial Group
AGMs: Crest Nicholson (LON:CRST) Holdings
Economic news: Inflation (UK), Consumer Confidence (FRA), Durable Goods (US), EIA Crude Oil Stocks (US)