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Here we look at the leading indicators in the world of economics.

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Spring Statement: Key Takeaways

The UK's Spring Statement highlighted the Government鈥檚 commitment to renewed fiscal discipline, particularly in following Chancellor Rachel Reeves鈥� self-imposed fiscal rules. While this approach may constrain future spending in areas such as welfare and public services, we still anticipate opportunities for real estate through the UK's aim to be a defence industrial superpower, mandatory housing targets and an increase in infrastructure investment. The chancellor announced a £14 billion package of spending cuts to restore a fiscal buffer of £9.9 billion by 2029-30, aiming for a balanced budget by 2027-28. The budget forecast shows a shift from a deficit of £36.1 billion in 2025-26 and £13.4 billion in 2026-27 to surpluses of £6 billion in 2027-28, £7.1 billion in 2028-29, and £9.9 billion in 2029-30.

The Office for Budget Responsibility (OBR) lowered its 2025 growth forecast from 2% to 1%, but raised projections for the following years, with GDP growth of 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029. The OBR expects inflation to rise to 3.2% in 2025 (up from the previous forecast of 2.6%) before dropping to 2.1% in 2026 and returning to the Bank of England鈥檚 2% target by 2027.

Pockets of positivity: Defence opportunities unlocked 

For UK commercial real estate, a few key themes stand out. The UK鈥檚 £2.2bn increase in defence spending signals a broader commitment to national security while also fuelling industrial and economic growth. As the government works toward its goal of allocating 2.5% of GDP to defence by 2027, this investment is expected to generate pan-sector real estate opportunities in markets where this is being targeted. Notably, 10% of this funding will be directed toward advanced technologies, including the development of directed energy weapons for Royal Navy ships. This is set to accelerate growth in advanced manufacturing, potentially driving demand for industrial and logistics space nationwide. Regions with established hubs in high-tech defence manufacturing, metalworks, or aerospace engineering are particularly well-positioned to benefit, as explored in our Spring Statement analysis.

No Bond Market Turmoil, but Tariffs loom on Trump's 'Freedom Day'

The UK gilt market experienced initial volatility following the downgrade of growth expectations, though much of this had already been priced in. UK 10-year gilts have since fallen to a near two-week low of 4.67%, a decline that mirrors broader trends in global bond markets after a turbulent month. Meanwhile, the pound has seen its performance turn around against a weakening dollar over the course of the quarter.

All eyes now turn to tomorrow鈥檚 announcement, where President Donald Trump is expected to reveal his reciprocal tariff strategy. While the UK has generally remained unaffected by the majority of Trump鈥檚 tariffs, this week鈥檚 decision to impose a 25% tariff on all US car imports includes the UK, adding to the existing 25% tariff on US steel and aluminium imports, which took effect on 12th March. The UK鈥檚 digital services tax and 20% VAT rate also put it at risk of being included in any future reciprocal tariffs.

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