Spring forecast: Reeves to insist she has ‘right economic plan’; Markets drop again as Middle East crisis drives up oil and gas prices – live updates

02.06 EST Introduction: Reeves to respond to spring forecast after oil and gas prices surge Good morning. “Events, dear boy, events”. Rachel Reeves may have the ( probably apocryphal, oft-quoted ) wisdom of Harold Macmillan in mind today, as she responds to the latest official assessment of the UK economy. The Office for Budget Responsibility’s new Spring Forecast could, in happier times, have brought the chancellor good news this afternoon. Economists predict they will show that the UK is still keeping within the OBR’s fiscal forecasts – helped by a record budget surplus in January – and that inflation is heading down towards target. However, the Middle East crisis mean such predictions are out of date before they’re even published, as the world faces the threat of a new energy crisis. Yesterday, liquefied natural gas prices rocked by over 40%, and oil rose by over 7%, after Qatar’s state-run energy firm halted LNG production and Saudi Arabia temporarily shutting down some units of its massive Ras Tanura oil refinery following attacks by Iran. These moves, as the US-Israel war on Iran rages, risk reigniting the cost-of-living crisis. As economists at Investec explain: The main economic consequence of higher energy prices would be to boost inflation. In the UK, illustratively, the current level of the oil price would, if maintained , add about 0.2%pts to headline inflation via higher petrol prices; and a sustained 40% shift up in natural gas price futures would boost this by a further 0.7%pts or so, via higher household utility bills. We’re not expecting major policy changes today, as the government has committed to holding just one major fiscal event each year in the autumn. That’s why it’s billed as the ‘spring forecast’ not the ‘spring statement’. Instead the chancellor is expected to insist the government has the “right economic plan for the country” in a “yet more uncertain” world. Reeves is expected to tell MPs: “Stability in the public finances, investment in...