UK growth forecast set for major downgrade as chancellor faces difficult spring statement

Published

5 months ago

March 21, 2025

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The chancellor’s update on the economy next week is not going to be an emergency budget in its truest sense. But it will be a moment when the sirens flash red.

It’s not an emergency budget because the chancellor, as our listeners will know from our interview with Rachel Reeves on Electoral Dysfunction a couple of weeks ago, is not going to make tax changes (such a move would tip it into budget territory because it would turn the spring statement into a major fiscal event).

But it looks set to be a red siren moment for a chancellor. Having staked her reputation on growing the economy and no return to austerity, she is going to have to announce a downgrade to growth forecasts and could also unveil the biggest spending squeeze on Whitehall in years.

The welfare cuts this week were just the starter – the opposition are going to have a field day.

Watch out in the next few days for a “re-education” as the Treasury tries to frame the arguments Reeves will get in at the despatch box on Wednesday.

You’ll hear about how the “world has changed”, with global uncertainly knocking growth and forcing countries to invest more in defence.

This is all part of the chancellor seeking to distance sluggish growth from her own budget decisions last October (the Conservatives will shout back jobs tax – their rebranding of the Reeves’ £25bn hike in employers’ national insurance contributions).

You will also be hearing more about the need to go “further and faster” on the economy (the bonfire of quangos, planning rules, regulations and drive for ‘efficiency savings’).

But whatever arguments she makes ahead of time won’t dent the sharp inhalation of breath as growth is downgraded and the chancellor outlines what’s likely to be billions in cuts to the departmental budgets in an effort to plug the black hole in the public finances that has emerged from slower growth and rising debt repayments.

Economists expect the deteriorating outlook to eat up the £9.9bn of headroom she had in order to meet her own fiscal rules in the October budget.

The Resolution Foundation think-tank estimates that the current account balance has shifted from that £9.9bn surplus to a deficit of around £4.4bn. Many Labour MPs think Reeves should just loosen her fiscal rules (she has legislated that day-to-day spending must be funded from tax receipts, not debt, by 2029/30), but she told me on our Electoral Dysfunction podcast that is something she will not do.

Neither, I hear, is she prepared to just let the public finances sit in the red. But getting back to black is going to involve a massive spending squeeze.

So watch for reductions in Whitehall departmental budgets later in the parliament.

The government has already earmarked £5bn in savings from the benefits bill by 2029/30 and could whittle back projected rises in departmental spending towards the back end of parliament.

Departmental spending is set to rise by an average of 1.3% from 2026-27 onwards. If the chancellor reduces that, she could save billions. But the headlines will scream cuts, especially for those departments which don’t have protected budgets and which could face real terms reductions.

It’s going to be difficult and the government is braced for cries of austerity 2.0, which is frustrating officials who are quick to point out that the government has poured billions more into public spending after executing the biggest tax and spend budget in a generation.

“This is not a return to austerity, which was about real terms cuts,” said one figure. “We will be finding savings and squeezing spending but the overall level of spending will still be going up.”

But it is tense. As she looks for savings, the chancellor has asked cabinet ministers to identify 5% efficiency savings from their departments and also identify 20% of the lowest priority spending. In private, ministers are protesting about cuts.

Labour peer Harriet Harman told the Electoral Dysfunction podcast that identifying such big levels of savings is going to cause consternation.

“As somebody who was told to do 2% and felt even that was incredibly difficult, then I should imagine that it is causing consternation.

“It is a very, very difficult exercise. But, you know, at the end of the day, we’re in difficult circumstances.

“We’ve made a promise to the electorate about how are we going to run the economy, and that’s what we’re going to do.

“And Labour MPs, I think, you know, are very resolved on this. They know the situation’s difficult. They know the government has got a set of principles that they’re applying to it, and they’ll be supportive of the government on this.

“So one thing we have got is political stability on this. There won’t be any, you know, screeching handbrake U-turns. There won’t be massive revolts and there won’t be cabinet splits either.”

The government hopes protest will be dialled down as it dials up talk about ‘reform’ and how the government can rewire Whitehall in a way that money is trained on the frontline and services can be maintained even as budgets are whittled back.

The biggest symbol of that so far being the prime minister’s announcement last week that he was abolishing NHS England and folding the oversight of the NHS back into the Health department – which the government says could save up to £500m a year.

But even if Harriet Harman is right on the would-be rebels and ministers have their arguments honed, a major downgrade of growth forecasts and a spending squeeze from a government that told voters it would be doing the exact opposite in the run-up to the election is set to be a very difficult day indeed.

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UK

Police separate anti-immigration and anti-racism protesters across the country

Published

12 hours ago

August 23, 2025

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Police separate anti-immigration and anti-racism protesters across the country

Protesters have gathered across the country as groups demonstrated against asylum seeker housing and were met by anti-racism campaigners.

Demonstrations under the Abolish Asylum System slogan were held in England, Scotland and Wales, including in Bristol, Exeter, Tamworth, Cannock, Aberdeen, Mold, Perth, Nuneaton, Liverpool, Wakefield, Newcastle, Horley and Canary Wharf.

Counter-protests were also organised by campaign group Stand Up to Racism.

In Bristol, mounted police separated the two groups in the Castle Park, with officers scuffling with protesters.

Police kept around 200 anti-immigration protesters draped in English flags away from roughly 50 Stand Up to Racism protesters in Horley, Surrey.

One man, wearing a West Ham United football shirt, was held by police as he yelled: “You’re not welcome here, you’re not welcome here, you’re not welcome here” at anti-racism protesters.

Anti-immigration protesters also chanted: “Tommy, Tommy, Tommy, Tommy Robinson” in support of the far-right activist, whose real name is Stephen Yaxley-Lennon.

The anti-racism protesters chanted “say it loud, say it clear, refugees are welcome here” and held signs calling for solidarity and to “stop deportations”.

The Stand Up to Racism protesters were shepherded into a smaller area as they continued to chant: “No hate, no fear, refugees are welcome here”, which was met with “No they’re f****** not” from the other side of the street.

In Perth, protesters gathered outside the Radisson Hotel.

The anti-migration protesters held up signs with slogans such as “Perth is full – empty the hotels” and “get them out”.

Stand Up to Racism Scotland said it had achieved “victory” in Perth, with more than 200 gathering to oppose the Abolish Asylum System demonstration.

In Liverpool, a dispersal order was issued to try and contain the protests.

Saturday’s events come amid continued tension around the use of the hotels for asylum seekers.

Regular protests had been held outside the Bell Hotel in Epping, Essex, which started after an asylum seeker housed there was charged with sexually assaulting a 14-year-old girl on 10 July.

Hadush Gerberslasie Kebatu, 38, was charged with trying to kiss a teenage girl and denies the allegations. He is due to stand trial later this month.

In the wake of those protests, Epping Forest District Council sought and won an interim High Court injunction to stop migrants from being accommodated there – a decision which the government is seeking permission to appeal.

UK

Reform UK’s new immigration plans would’ve been extreme just a few years ago

Published

13 hours ago

August 23, 2025

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Reform UK's new immigration plans would've been extreme just a few years ago

Mass deportations. Prison camps. Quitting the Refugee Convention and the UN Convention on Torture.

A shrug of the shoulders at the idea of the UK sending asylum seekers back to places like Afghanistan or Eritrea, where they could be tortured or executed.

“I’m really sorry, but we can’t be responsible for everything that happens in the whole of the world,” says Nigel Farage.

“Who is our priority?”

The Reform UK leader has been setting out his party’s new plans to address illegal migration in an interview with The Times newspaper – a set of policies, and a use of language, which would surely have been seen as extreme just a few years ago.

Only last autumn the Reform leader repeatedly shied away from the concept of “mass deportations”, describing the idea as “a political impossibility”.

But now he’s embraced Trump-style immigration rhetoric.

It’s not surprising that Reform want to capitalise on the outpouring of public anger over the use of hotels to house asylum seekers. The policy was started by the previous Conservative government, in response to housing shortages – and Labour has failed to make significant progress on its promise to stop it.

But all the major parties have shifted firmly to the right on this issue.

There’s been very little political criticism of the aggressiveness of Farage’s policy suggestions, and the premise that the UK should no longer offer sanctuary to anyone who arrives here illegally.

The Tory response has been to complain that he’s just copying the ideas they didn’t quite get round to implementing before calling the general election.

“Four months late, this big reveal is just recycling many ideas the Conservatives have already announced,” said Chris Philp MP, the shadow home secretary.

“Labour’s border crisis does urgently need to be fixed with tough and radical measures, but only the Conservatives have done – and will continue to do – the detailed work to deliver a credible plan that will actually work in practice.”

Certainly, the ambition to arrest and deport everyone who arrives in a small boat – regardless of whether or not they have legitimate grounds for asylum – has clear echoes of the Tories’ Rwanda policy.

Despite spending £700m on the controversial idea, only four volunteers were ever sent to Kigali before it was cancelled by Sir Keir Starmer, who branded it a gimmick.

Labour have suggested they’ve diverted Home Office resources that were freed up by that decision into processing asylum claims more quickly and increasing deportations.

They’re hoping tougher action against the criminal gangs and the new “one in one out” deal with France will help deter the number of people crossing the Channel in small boats in the first place, currently at record levels.

But rather than offering any defence of the principle of offering asylum to genuine refugees – Labour’s Angela Eagle MP, the border security minister, has also focused on the feasibility of Farage’s policies.

“Nigel Farage is simply plucking numbers out of the air, another pie in the sky policy from a party that will say anything for a headline,” she said.

“We are getting a grip of the broken asylum system. Making sure those with no right to be here are removed or deported.”

Even the Liberal Democrats have taken a similar approach.

“This plan sums up Nigel Farage perfectly, as like him it doesn’t offer any real solutions,” they said.

“Whilst Farage continues to stoke division, we Liberal Democrats are more interested in delivering for our local communities.”

It’s been left to the Refugee Council to defend the principle of asylum.

“After the horrors of the Second World War, Britain and its allies committed to protecting those fleeing persecution,” said CEO Enver Solomon.

“The Refugee Convention was our collective vow of ‘never again’ – a legal framework ensuring that people who come to our country seeking safety get a fair chance to apply for asylum.

“That commitment remains vital today. Whether escaping conflict in Sudan or repression under regimes like the Taliban, people still need protection.

“Most find refuge in neighbouring countries. But some will seek sanctuary in Europe, including Britain.

“We can meet this challenge by upholding a fair, managed system that determines who qualifies for protection and who does not.”

But with Reform leading in the polls, and protests outside hotels across the country – politicians of all stripes are under pressure to respond to public frustration over the issue.

A recent YouGov poll found half of voters now believe immigration over the last ten years has been mostly bad for the country – double the figure just three years ago.

While the government has made some progress in reducing the cost of asylum hotels – down from £8.3m a day in 2023/4 to £5.77m a day in 2024/5 – the overall numbers accommodated in this way have gone up by 8% since Labour took charge, thanks to the surge in new claims.

Sir Keir has previously said he won’t make a promise he can’t keep.

But current efforts to end the use of asylum hotels by 2029 are clearly not working.

That’s a credibility gap Farage is more than ready to exploit.

UK

Three people in a life-threatening condition after ‘arson attack’ at restaurant

Published

16 hours ago

August 23, 2025

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Three people in a life-threatening condition after 'arson attack' at restaurant

Three people are in a life-threatening condition after a suspected arson attack at a restaurant in Ilford, say police.

Five people – three women and two men – were injured in the fire, which broke out shortly after 9pm on Friday at Indian Aroma on Woodford Avenue, Gants Hill.

No arrests have been made.

Hospital porter Edward Thawe, 43, went to help with his son after hearing screams from his nearby home.

He described the scene as “horrible” and “more than scary and the sort of thing that you don’t want to look at twice”.

He said: “I heard screaming and people saying they had called the police.”

He said he saw a woman and a severely burned man who may have been customers.

He said the man’s “whole body was burnt”, including his shirt, but he was still wearing his trousers.

After being treated at the scene by paramedics from the London Ambulance Service, the victims were taken to hospital.

Nine others were able to get out beforehand, London Fire Brigade (LFB) said in a statement.

“The brigade’s control officers received seven calls about the fire and mobilised crews from Ilford, Hainault, Leytonstone and Woodford fire stations to the scene. The fire was extinguished by 10.32pm,” said an LFB spokesperson.

“We understand this incident will cause concern within the community. My team of specialist detectives are working at speed to piece the incident together,” said Detective Chief Inspector Mark Rogers, of the Met’s Central Specialist Crime North unit.

“Locals can expect to see a large police presence in the area. If you have any concerns, please speak to those officers on the ground.”

The London Ambulance Service told Sky News: “We sent resources to the scene, including ambulance crews, an advanced paramedic, an incident response officer and paramedics from our hazardous area response team.

“We treated five people for burns and smoke inhalation. We took two patients to a major trauma centre and three others to local hospitals.”

Health secretary Wes Streeting, who is the MP for Ilford North, posted on X to thank the emergency services for their response to the fire.

He also asked his constituents to “please avoid the area for now”.

Anyone with information is urged to contact the Met via 101, quoting 7559/22AUG. If you wish to remain anonymous, please speak with Crimestoppers on 0800 555 111.