KPMG UK’s economists have offered measured reactions to two key UK economic releases this week: the government’s Spring Forecast and the Bank of England’s latest Money and Credit statistics for January 2026. Together, the updates from KPMG UK paint a picture of cautious fiscal resilience alongside persistent household caution in an uncertain environment.
In its assessment of the Spring Forecast, KPMG highlighted how the document largely reaffirmed earlier government commitments while refreshing the Office for Budget Responsibility’s core projections.
The primary goal, according to the firm, appears to be demonstrating that steady policymaking can remove the need for an additional fiscal event, allowing ministers to concentrate fully on the main Budget later this year.
Despite softer growth projections and additional spending pressures that have emerged since the Autumn Budget, the Chancellor’s fiscal headroom has actually widened.
It climbed from £21.7 billion in November to £23.6 billion, driven primarily by more robust forecasts for public-sector revenues.
Yael Selfin, Vice Chair and Chief Economist at KPMG in the UK, noted that the OBR’s outlook remains comparatively upbeat.
The watchdog still anticipates a meaningful rebound in growth during 2027, with GDP expanding by 1.6% — a figure notably higher than the 1.4% consensus among many independent forecasters.
However, Selfin cautioned that the OBR’s assumptions around productivity gains and long-term potential growth appear relatively optimistic, raising the possibility of future downward revisions.
Turning to the Bank of England’s January 2026 Money and Credit data, KPMG’s analysis underscores the lingering fragility in household finances.
Mortgage activity got off to a subdued start, with borrowers continuing to prioritise financial security over major commitments following a challenging end to 2025.
While expectations of lower interest rates have improved slightly, ongoing uncertainty around budgets is still delaying decisions on home purchases and remortgaging.
Karim Haji, Global and UK Head of Financial Services at KPMG, observed that the uptick in consumer borrowing likely reflects continued pressure on household budgets rather than renewed confidence.
Many families appear to be using credit to spread the cost of seasonal expenses into the new year.
Haji welcomed the recently announced reduction in the energy price cap, which is expected to deliver relief from April, but stressed that broader cost-of-living strains remain.
Looking ahead, Haji emphasised that lenders and financial services firms face a pivotal period.
With new trade tariffs and recent political developments — including by-election outcomes — adding to market volatility, providers must balance ambitions to encourage investment and stronger savings with a sharp focus on affordability, transparency, and fair value.
Clear communication and customer support will be essential as households navigate this complex landscape.
Overall, the KPMG updates suggest a UK economy that is holding steadier on the fiscal front than many feared, yet still grappling with subdued consumer momentum. KPMG’s commentary underscores the importance of consistent policy and targeted support to sustain recovery momentum through 2026 and beyond.
