The Chancellor will be forced to take action to stick to her rule of meeting day-to-day spending through tax receipts, rather than extra borrowing, in response to gloomy forecasts from the budget watchdog.
And the watchdog is said to have warned that cuts to welfare set out in recent weeks have fallen short of the £5bn savings ministers expected, according to media reports, leaving the Chancellor with a £1.6bn hole likely to be filled with further cuts.
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Reeves to address grim economic outlook as she faces budget watchdog’s verdict Sort: Newest first Oldest first March 26, 2025 8:50 amWhat Reeves has said in the lead-up to her Spring Statement
Ahead of the statement, the Chancellor has:
Said the UK has “not been immune” from “increases globally in the cost of government borrowing”.Insisted that “economic stability is non-negotiable” and she will “never play fast and loose with the public finances”.Promised that she would not use the spring statement to raise taxes.Confirmed plans to tell Whitehall departments to cut administrative budgets by 15 per cent, expected to save £2.2bn a year by 2029-30.Announced £2bn of funding for social and affordable homes in England.Promised to train tens of thousands of construction workers to help deliver the promised 1.5 million new homes in England before the next election. March 26, 2025 8:45 amInflation unexpectedly falls to 2.8% in boost for Reeves
The prices of clothes and shoes fell for the first time in more than three years, the Office for National Statistics (ONS) said.
Most analysts had been expecting CPI inflation to come in at 2.9 per cent for February.
The UK inflation rate (Photo: PA Graphics)
The bigger-than-forecast inflation drop could provide some relief for Reeves as she prepares to deliver her spring statement on Wednesday afternoon.
ONS chief economist Grant Fitzner said: “Inflation eased in February. Clothing prices, particularly for women’s clothes, was the biggest driver for this month’s fall. This was only partially offset by small increases, for example, from alcoholic drinks.”
Women’s clothes, accessories like hats and scarves, and children’s clothing all helped bring down the inflation rate last month. Housing inflation, including rents, also slowed in February, as did admission prices for live music.
Responding to the latest data, Chief Secretary to the Treasury Darren Jones said: “Our number one mission is kickstarting growth to raise living standards for working people, that is why we are protecting working people’s payslips from higher taxes.”
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March 26, 2025 8:36 am‘In an era of global change, we will deliver security,’ says Starmer
Ahead of the spring statement, Prime Minister Sir Keir Starmer said: “In an era of global change, we will deliver security for working people and renewal for Britain.”
Prime Minister Sir Keir Starmer (Photo: Chris Radburn/PA Wire) March 26, 2025 8:22 amCharities and health experts warn welfare cuts could cost lives
Prime Minister Sir Keir Starmer has described the current welfare system as “morally indefensible”, insisting Labour’s reforms will help those who can work to get jobs.
A tightening of eligibility for the main disability benefit personal independence payment (PIP) and cut to the health element of universal credit (UC) have prompted stark warnings and calls for a rethink.
An official impact assessment is expected to be published today, coinciding with Chancellor Rachel Reeves delivering her Spring Statement.
Prime Minister Keir Starmer and Chancellor of the Exchequer Rachel Reeves (Photo: Frank Augstein/Pool via REUTERS)Mental health charity Mind said its helpline advisers had reported that some people had indicated their level of worry was such that they felt they had “no choice but to end their own life”.
Disability charity Scope said calls to its helpline on the day of the announcement had more than doubled to 344 from 118 the week earlier, while its online community saw 20,000 interactions on the day compared to 15,000 seven days before.
Meanwhile, a group of public health experts said further cuts to social security could lead to deaths.
The Government has pledged to invest an additional £1bn-a-year by 2029/2030 to help support people into work including through one-to-one help and said it will protect disabled people who will never be able to work by scrapping the need for them to have benefits reassessments.
March 26, 2025 8:07 amReeves to address grim economic outlook as she faces budget watchdog’s verdict
The Chancellor will be forced to take action to stick to her rule of meeting day-to-day spending through tax receipts, rather than extra borrowing, in response to gloomy forecasts from the budget watchdog.
And the watchdog is said to have warned that cuts to welfare set out in recent weeks have fallen short of the £5bn savings ministers expected, according to media reports, leaving the Chancellor with a £1.6bn hole likely to be filled with further cuts.
In her spring statement, the Chancellor will tell MPs that a “more insecure world” requires a greater focus on national security, with a promise to increase defence spending by £2.2bn from April as part of the previously announced plan for the biggest boost in military funding since the Cold War.
“To grasp the opportunities that we now have and help Britain reach its full potential, we need to go further and faster to kickstart growth, protect national security and make people better off through our plan for change.”
In its October forecast, the OBR expected gross domestic product – a measure of the economy’s size – to grow by 2 per cent in 2025 and 1.8 per cent in 2026 but that is widely expected to be downgraded.
Lower-than-expected growth will lead to smaller tax receipts than had previously been budgeted for. The latest official borrowing figures, for February, were £4.2bn higher than had been forecast by the OBR.
But the lack of growth and the increased cost of borrowing will eat into that headroom, forcing the Chancellor to take action to ensure she continues to meet the rule – which is designed to show that Labour can be trusted with the public finances.
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