The Chancellor, Rachel Reeve’s Spring Statement 2026 and the Office for Budget Responsibility’s (OBR) economic forecasts have now been published. The government emphasised that the main aim for business was for stability and to tackle the cost of living. Unfortunately world events may be against them as the conflict in the Middle East looks already certain to impact energy and fertiliser costs and so have a knock on impact on the food and agri sector. Inflation was predicted to average 2.3% this year, before reaching the government's 2% target in 2027 and it is not yet known what impact any ongoing conflict may have on these predictions.
Energy and food inflation
The impact of conflict on markets will have an effect, especially on supply of oil, gas and shipping of fertiliser from the Middle East region. There is also the potential for sustained changes to global trade patterns that could similarly impact food inflation. The UK's Office for Budget Responsibility said the escalation of the conflict could upset its forecasts, warning it could have "very significant impacts on the global and UK economies". Separately, the Association of Independent Meat Suppliers (AIMS) has warned there could be an impact on red meat, poultry and input costs such as fertiliser. Grain prices have also firmed. A change to trade routes, with supply coming from different locations, may further impact both costs and markets.
Key considerations for business
From a business legal risk perspective, producers and food businesses should review their procurement and sales obligations as well as supply chains in light of the current instability. If supply is directly impacted there would need to be careful review of any relevant force majeure and liability clauses. Other considerations would be where a particular specification is contracted for, similarly for food supply chains to be regularly reviewed for vulnerabilities where food fraud may seek to take advantage of market volatility.
Growth and business rates
Economic growth is forecast to slow from 1.4% this year to 1.1%. The Office for Budget Responsibility (OBR) predicted growth of 1.6% in 2027 and 2028 and 1.5% in 2029 and 2030.
GDP per capita was expected to grow by 5.6% over this parliament. This resulted in the claim from Rachel Reeves that people will be £1,000 a year better off. Certainly, that would be good news for the hospitality industry; however, with the current surge in energy prices and food prices similarly expected to rise, this might not be seen in the consumer’s pockets. Real disposable incomes – a measure of living standards – are forecast to grow by less than 0.25% in 2025-26. In January this year, pubs and music venues in England were given a 15% discount on business rates bills from April, with a promise of no increases for two years, this will also cost the Treasury an extra £100m a year. However, UK Hospitality has already warned that hotels, restaurants and other businesses in the sector were also at risk, calling for the support package to be widened.
Key considerations for business
Hospitality business’ should be looking to understand how the business rates change will impact their venues.
Employment and immigration
UK unemployment forecast to increase to 5.3% this year, before falling gradually to 4.1% by 2030. Net migration predicted to be 60,000 a year lower than in November, as more British nationals estimated to leave UK. Overall net migration expected to fluctuate between 200,000 and 300,000 a year between now and the end of the decade. Labour shortages and skills gaps in the food sector look set to continue and this may raise concerns over supply, service levels and long-term workforce resilience.
Key considerations for business
Skills shortages along with new employment rights are likely to have an impact on part of the food sector that require large workforce. Business should be looking at retention strategies to keep skilled workers in the business while managing the legal risks around new employment rights due to come in.
Inheritance Tax
The planned threshold for 100% relief from IHT on inherited farmland (and other agricultural and trading business assets) was increased from £1m to £2.5m in December 2025 and this was retained, meaning the policy will raise £100m a year less. The policy remains deeply unpopular, and criticisms include the undermining of food security in the UK. A judicial review challenge to the proposed changes has been listed for an urgent 2 day hearing in person at the Royal Courts of Justice on 17-18 March. The claimants allege that the government acted unlawfully by failing to properly consult on the proposed changes. The claim will be heard while the relevant measures in the Finance Bill (due to take effect from 6 April) are still being considered by Parliament. If the Court finds in favour of the claimants, it will be for the government to decide whether/how to give effect to the Court’s ruling. The government could decide to pause, commit to a proper consultation, and introduce amended measures. However, the government cannot as a matter of constitutional law be required to remove or amend the offending measures in the Finance Bill.
Key considerations for business
Farmers should update succession planning in light of the changes.
For more help in relation to any of the above please reach out to our food and agri team.
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