Latest updates and stories from Bedfordshire Chamber of Commerce and its Members

The Chancellor's Spring Statement, delivered today, was not a Budget - there were no major new tax or spending announcements. Instead, it offered an updated set of economic forecasts from the Office for Budget Responsibility (OBR) and a clear message of stability and security from the Chancellor. For businesses in Bedfordshire, the picture is one of modest near-term challenges, cautious longer-term improvement, and significant uncertainty that has yet to be fully accounted for

The Growth Picture: A Downgrade Now, Recovery Later

The headline figure for many businesses will be the OBR's decision to downgrade its growth forecast for this year from 1.4% to 1.1%. That is a meaningful reduction and reflects the challenges many businesses are already experiencing with subdued demand, rising costs, and cautious consumer spending.

However, the OBR’s revised forecast does include slightly improved growth for the years ahead. It now predicts growth will be 1.6% in both 2027 and 2028, and 1.5% in 2029 and 2030.

These are not transformative numbers. They suggest a slow and steady recovery rather than the kind of growth that would significantly shift the dial for SMEs looking to invest and expand. For Bedfordshire businesses planning ahead, the message is one of gradual improvement.

Employment and Inflation: A Mixed Bag

The labour market outlook presents a real concern. Unemployment is forecast to rise from 4.75% in 2025 to a peak of 5.3% in 2026. This will then start to fall back in 2027. For employers, this may ease some recruitment pressures in sectors that have struggled with vacancies. However, rising unemployment also signals weaker consumer confidence and spending power, which affects demand across the board.

On inflation, the news is more encouraging. The OBR projects inflation will fall from 3.4% in 2025 to 2.3% in 2026, reaching the Bank of England's 2% target by late 2026. This is earlier than previously forecast. If this holds, it should ease cost pressures for businesses and may open the door to interest rate reductions, which would be welcome news for firms carrying debt or considering borrowing to invest.

The Fiscal Position: A Slightly Bigger Buffer

While growth has been lower than expected, public sector borrowing is projected to fall from 5.2% of GDP in 2024/25 to 4.3% this year. There has also been a reduction in debt interest payments. The result is that fiscal headroom has increased from £21.7 billion to £23.6 billion, providing a slightly larger financial buffer. This is positive news.

However, as the OBR noted, the fiscal headroom is still smaller than the historical average enjoyed by previous chancellors. The increase is also relatively negligible. Questions remain whether it is of significant size to provide stability in the event of an unexpected, and protracted, economic shock.

The Elephant in the Room: Middle East Uncertainty

The most significant caveat to everything announced today is that the OBR’s forecasts were compiled before the Middle East conflict began. Therefore, its impact has not been factored into their projections. As stated in their Economic and fiscal outlook, the OBR’s forecast “lies in the middle of a wide range of possible outcomes" with "significant risks around it." The Middle East conflict “could have very significant impacts on the global and UK economies."

Oil prices have already risen sharply with the closure of the Strait of Hormuz. Energy costs, supply chain disruption, and broader economic confidence could all be affected. For Bedfordshire businesses, particularly those with exposure to international supply chains or energy-intensive operations, this is a risk that needs monitoring closely.

What's Coming Next

The Spring Statement also signalled further announcements in the coming weeks regarding youth unemployment and "three major choices that will determine the course of our economy into the future", covering strengthening global relationships, breaking down trade barriers, and harnessing the power of AI. This will be worth watching closely as they could represent the kind of strategic direction that was notably absent from the Autumn Budget and that businesses in Bedfordshire have been calling for.

What This Means for Bedfordshire Businesses

As Shevaun Haviland, Director General of the British Chambers of Commerce, has noted, “Today’s Spring Statement confirmed that the UK economy is heading in the right direction, but a further acceleration is needed” and “there is more to do.”

For businesses in Bedfordshire, the Spring Statement creates a landscape of cautious patience:

• Slower growth this year and rising unemployment may dampen demand and confidence. Businesses should plan for a sluggish 2026.
• The growth and inflation forecasts suggest conditions should improve from 2027, but this depends heavily on global stability.
• The Middle East conflict represents a genuine wild card. Businesses should stress-test their plans against the possibility of rising energy costs and further economic disruption.
• The promised announcements on trade, AI, and youth employment could contain measures of real significance for SMEs. We will be monitoring these closely on behalf of our members.

Stability Is Welcome, But Businesses Need More

The Chancellor's core message today was one of resilience and fiscal discipline. That is welcome. But for businesses navigating rising costs, workforce challenges, and an uncertain global environment, stability alone is not sufficient, particularly given the current global uncertainties.

What firms across Bedfordshire continue to tell us they need is a clear, long-term strategy for growth - one that addresses investment, productivity, skills, infrastructure, and trade. Today's Spring Statement held the line. The announcements in the coming weeks will tell us whether the government is ready to go further.

For more information on how we represent Bedfordshire businesses at a national level, or to become a Chamber member if you're not yet one, contact our team on 01582 522448.