Spring Statement 2026 overshadowed by global conflict: How might your finances be affected?

Conflict in the Middle East “could have very significant impacts on global and UK economies”, warned the Office for Budget Responsibility.

Although there were no surprises in today’s Spring Statement, it’s crucial consumers aren’t complacent given the rapidly evolving geopolitical landscape.

As was widely expected, the Chancellor of the Exchequer, Rachel Reeves, held off making any major changes to tax and spending policies – instead choosing to provide an update on the state of the economy. Nevertheless, there’s still a chance latest forecasts from the Office for Budget Responsibility (OBR) and the developing situation in the Middle East could have an impact on people’s pockets.

Encouragingly, the OBR revealed UK inflation is currently expected to ease to an average of 2.3% in 2026 (down 0.2 percentage points from its previous forecast) and is on track to reach the Bank of England’s 2% target later this year. This, combined with forecasts for weaker economic growth and higher levels of unemployment, usually might have prompted the Bank of England to cut the UK's central interest rate (also known as the ‘base rate’).

However, the OBR warned its latest forecasts were finalised just as conflict in the Middle East escalated, which “could have very significant impacts on the global and UK economies”. If sustained, we could see inflation creep higher due to pressures on supply chains driving up the cost of oil and gas – casting doubt over any future base rate reductions.

How might mortgage rates be affected?

The current uncertainty has had an “almost instantaneous” impact on the mortgage market, according to Adam French, Head of Consumer Finance at Moneyfacts, who said “swap rates are rising sharply as conflict with Iran spreads across the Middle East”.

“Because fixed mortgage pricing is closely linked to swap rates, this sudden market movement risks halting the recent momentum towards lower mortgage rates just as borrower confidence had begun to recover ahead of an anticipated rate cut,” he explained.

With some lenders already having postponed or reconsidered making cuts, it’s an important reminder to borrowers that many factors influence mortgage pricing and expectations for lower rates are never guaranteed. For help navigating the ever-changing market, it might be wise to speak to a mortgage broker.

What about savings?

While we wait to see how interest rates react to swap market volatility, savers must remember that time is running out to use any remaining ISA allowance before it automatically resets once the new tax-year begins on 6 April.

And, with the Chancellor of the Exchequer confirming in last year’s Autumn Budget that the cash ISA allowance will be reduced to £12,000 per tax-year for under-65s from April 2027, it could prove all the more important to maximise contributions.