For those of us in the Middle East our thoughts are understandably on issues closer to our current homes at this time but this still has relevance to UK nationals and those with assets in the UK.

Chancellor of the Exchequer, the RT Hon Rachel Reeves, has shared her update on the UK economy – the Spring Statement. This is not a Budget, but an update, a forecast statement.

It covers the latest estimates for growth, unemployment, inflation, government spending and income from taxation has been published by The Office for Budget Responsibility.

Think of if as a bit of report card and some qualified predictions.

Following every Budget or Statement, I write an article to give you a concise overview of some of the main points, with particular reference to any changes that have major relevance to those living outside of the UK, and especially in the GCC. Quick, easy to follow, and informative

The UK press will cover many points in detail but much of it will not be directly relevant to expats so i alsoway write someitnung for us, although this has little of direct relevane to non-residents.

The City was expecting this to be something of a non-event and rather low-key. It was short and to the point. Just a shame the actual OBR summary wasn’t…

We need to be aware that these published forecasts do not take into account the recent events in the Gulf. These will affect prices for both oil and gas and the increase in energy prices will affect inflation.

I have included a section at the end about the geopolitical effect on oil and gas prices if of interest.

Why does the Spring Statement matter?

This is not a big event for the average person, like the annual Budget, but the information in the Statement influences government decisions and future spending. It can affect decisions on raising or cutting taxes as well as general government expenditure.

The OBR forecast is a look at expectations up to the tax year 2030/31. It is essential for proper fiscal planning.

What do we need to know?

• There have been six cuts in interest rates since the General Election.
• The updated growth forecasts from the Office for Budget Responsibility (OBR) are that “average growth across the forecast period is largely unchanged”.
• Inflation is forecast to fall faster than previously thought, reaching 2.3% this year.
• GDP is expected to grow by 1.1% in 2026, down from the November prediction of 1.4%. GDP growth is expected to be a little slower in 2026 but faster in 2027 and 2028.
• Growth is expected to pick up to 1.6% annually from 2027-2030.
• Public sector borrowing levels are down and are less than the G7 average
• Labour market conditions are expected to slightly worsen, with unemployment rising from 4.75% in 2025 to 4.33% in 2026, then falling to 4.1% by 2030. The last Budget forecast the peak at 4.9%.
• Inflation is projected to decline to the Bank of England’s 2% target by late 2026, driven by lower energy and food prices. The current Gulf conflict could affect this.
• House price inflation forecast at 2.5% annually. This is an average and it will vary by region.
• Increased revenue from Capital Gains Tax and Inheritance Tax, much of this from increases in generation wealth and inflationary effects.

 How will the Gulf conflict affect the UK economy?

The same factors will affect many global economies but let’s look at a few of them.

Lots of what-ifs here. Mainly depending on how long it goes on with the interruptions to supply which affects prices. We’re not just talking oil prices, but also gas. (LNG – Liquid Natural Gas).

The Strait of Hormuz is a key location in world oil and gas supply. Normally some 20 million barrels of crude oil, condensate and oil products a day pass through, some 20% of world markets.

Around 20% of world LNG passes through the Strait of Hormuz.

With a reduction in traffic and strikes against regional energy infrastructure, supply reduces. Reduced supply = higher prices.

If this conflict is short-lived the effect will be short-term and minimal. If it goes on, that’s when we will see a larger effect.

By comparison to historical averages, oil is currently still a relatively “cheap” commodity so the global economy is decently placed to deal with some increases. Prices are currently a long way under the peaks of the 1970s oil crisis or the 2008 Global Financial Crisis.

LNG price is more likely to be affected as there is very limited scope to re-route that. North Western Europe has significantly increased its reliance on LNG imports since the invasion of Ukraine.

Geopolitical risk is always a factor in energy prices but I understand that much of Western Europe has increased the supplies it holds and as it heads into spring, household demand is lower than it has been. Inndustry and manufacturing demand will be largely unchanged.

In short, a sustained increase in energy prices will lead to higher inflation, risk of interest rate increases, overall financial pressure.

For many reasons we are all hoping the current issues in the Gulf are resolved quickly.

Other points

US Supreme Court has ruled that the US Government’s use of emergency tariffs is unlawful, and the US Government has since announced a global tariff rate on an alternative basis. These tariffs also have an effect on trade and the OBR forecasts, potentially leading to a reduction in UK GDP.

I haven’t seen any announcements that specifically relate to non-residents. There is nothing in the full Statement either.

TLDR?  It’s boring but boring is good. Spring summaries are not supposed to be interesting. The drama is for annual Budgets.

I have read through the full OBR Economic and Fiscal Outlook – Spring 2006 (yes, it’s as dry as it sounds) Spring Statement 2025 as issued by HM Treasury (131 pages!!) and there is nothing specifically related to taxing expats or that will adversely affect us.

The UK economy is not going poorly despite what much of the UK media would like you to believe (Do remember who owns most of the newspapers and that they have their own agendas.) The world is more complex than ever and geopolitical actions can throw even the best forecasts.

 

I write articles such as this one as part of the full personal financial planning service and that I provide to expats, and the general consumer, financial and legal information that I provide in The National newspaper, other UAE media, and on the Facebook group British Expats Dubai.

To arrange a meeting to discuss any aspect of your personal financial planning, please email me at keren@holbornassets.com   or use the contact form at the end of this article.

Please take a look at the other useful articles on this website, including those mentioned below.

UK Budget November 2025. A summary for expats

Areas of advice. How can I assist?

Currency transfers. How to get the best rates with full security

Living in the UAE. 10 major money mistakes to avoid

These summaries take time, so please give this a like using the star like option at the end. Thank you