The chancellor’s low‑key update may lack headline‑grabbing measures, but for an industry navigating fragile economic conditions, policy consistency could be its biggest benefit, writes RLB’s Andrew Reynolds
The chancellor deliberately played down expectations ahead of the Spring Forecast yesterday, reiterating a preference for a single, annual fiscal event each autumn. That message resonates with what our clients are telling us matters for their businesses. Against a backdrop of heightened geopolitical uncertainty, businesses have been clear about what they value most right now: stability, predictability and time for policy to take effect.
With the Autumn Statement delivered in late November and the Spring Forecast following in early March, separated by little more than a quarter and the festive period, absence of new fiscal announcements is not a disappointment. On the contrary, it is reassuring. The chancellor had signalled that this would be a low key update, and any surprise policy interventions at this stage would have raised more concern than confidence.
The accompanying economic outlook from the Office for Budget Responsibility reinforces the picture already emerging from recent data. Growth forecasts remain weak (down from 1.4% to 1.1% for 2026) and unemployment has edged higher, but inflation has been easing and the direction of travel on interest rates is downwards, with further cuts hoped for over the year ahead.
Importantly, the OBR has confirmed that the chancellor’s fiscal headroom has increased from £21.7bn at the last forecast to £23.6bn at this. In an economy still marked by fragile growth and persistent geopolitical risk including ongoing trade tensions this additional headroom provides some reassurance that the government retains options should conditions deteriorate further. The early months of 2026 have been eventful, and the acknowledgement of global risks underlines the need for caution.
What does this mean for construction?
The chancellor promised “to back the builders not the blockers” and the message for the construction industry is clear: no new hurdles, but no new handouts either. Policy is set, and the measures announced in November now need time to bed in and translate into real‑world impact. In that context, policy continuity is valuable. It allows investors, developers, contractors and advisers to navigate a delicate economic environment without the added complication of sudden regulatory or fiscal shifts.
Current events in the Middle East are more than capable of impacting domestic factors from inflation to interest rates
The risks facing the sector are well understood. Geopolitics and trade remain finely balanced, and the current events in the Middle East are more than capable of impacting domestic factors from inflation to interest rates that will in turn continue to influence demand and viability across different parts of the industry. Input costs, including the impact of fuel costs may fluctuate in response to international events, but such impacts are often uneven and over time diffused through the supply chain. We have seen this with the impacts of Ukraine and covid-19 before and have hopefully learnt some lessons on risk pricing, mitigation and collaborative working.
There are also grounds for cautious optimism. Latest ONS data, published in February, shows construction making a positive contribution to UK productivity. The sector saw an increase of nearly 1% a year in output per hour over the period from 2019 to 2025 and this positive contribution is in the top 40% of all UK sectors. Encouragingly, this improvement is being driven more by increases in Gross Value Added than by reductions in hours worked – a sign that the sector is capable of doing more with less.
RLB’s own recent research shows the importance of AI, digital and data in future productivity gains while recognising that people and process will play a significant role too. The chancellor noted forthcoming announcements including harnessing the power of AI, presumably with a view to productivity driving economic growth.
The challenge now is for the industry to build on that momentum. With no policy shocks yesterday, the focus can remain on delivery: improving project viability, embracing productivity enhancing practices and demonstrating the role construction can play in supporting sustainable economic growth. No news may be good news for a Spring Forecast – but it should not obscure the quiet and difficult progress the sector is making.
Andrew Reynolds is RLB UK & Europe chief executive and global board member
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