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

Published

1 month ago

March 21, 2025

admin

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.

👉 Click here to follow Electoral Dysfunction wherever you get your podcasts 👈

UK

Man ‘seen with weapons’ detained in Leeds after three injured

Published

22 mins ago

April 26, 2025

admin

Man 'seen with weapons' detained in Leeds after three injured

A man has been detained in Leeds after being “seen with weapons” and three people were left injured.

Police were called to Otley Road at 2.47pm on Saturday to reports of a “serious incident involving a man seen with weapons”, West Yorkshire Police said.

Officers arrived at the scene to find three people injured and a man was detained at the scene, the force said. The injuries are not believed to be life-threatening.

Inquiries are under way to establish the “wider circumstances” and a “number” of crime scenes remain in place, they added.

This breaking news story is being updated and more details will be published shortly.

Please refresh the page for the fullest version.

You can receive breaking news alerts on a smartphone or tablet via the Sky News app. You can also follow us on WhatsApp and subscribe to our YouTube channel to keep up with the latest news.

UK

Wrexham promoted for third season in a row under Ryan Reynolds and Rob McElhenney

Published

22 mins ago

April 26, 2025

admin

Wrexham promoted for third season in a row under Ryan Reynolds and Rob McElhenney

Wrexham AFC have been promoted for the third season in a row.

The North Wales-based side has gone from the National League to the Championship in just three seasons, under its Hollywood owners Ryan Reynolds and Rob McElhenney.

Wrexham were second in the table and had a run of eight games unbeaten ahead of their match against Charlton Athletic on Saturday, which they won 3-0.

It is the first time any club has been promoted for three consecutive seasons within the top five tiers of English football.

The third oldest association football club in the world, Wrexham AFC was bought by Reynolds and McElhenney in 2020, and has since been the subject of a Disney+ documentary, Welcome To Wrexham.

Reynolds, wearing a Wrexham sweatshirt, and McElhenney were pictured celebrating each goal, and after the game, as the fans came onto the pitch at the SToK Cae Ras (Racecourse Ground) to celebrate the victory with the players.

Both stars came onto the pitch after the supporters returned to the stands.

Speaking to Sky Sports, McElhenney praised those behind the scenes, referring to “so many that don’t get the credit they deserve, people who aren’t talked about”.

Reynolds said bringing success back to the club “seemed like an impossible dream” when they arrived in North Wales in 2020.

He put the three promotions down to “the coaching staff, the greatest dressing room” and an “all for one, one for all” attitude throughout the club, adding he was “speechless with their commitment and their emotion”.

As for the mouth-watering prospect of another promotion to the promised land of the Premier League, the pair agreed it was “for tomorrow”, before ending the interview with a joint mic-drop.

Veteran striker Steven Fletcher said, “as soon as I came to this club, I knew it was something special. We want to go again. We’ll reset in the summer, take a break and go again”.

UK

Who was at the Pope’s funeral – and who wasn’t

Published

9 hours ago

April 26, 2025

admin

Who was at the Pope's funeral - and who wasn't

The Pope’s funeral is taking place today at St Peter’s Basilica at the Vatican.

A pope’s funeral traditionally brings world leaders together, and several were in attendance.

Watch full coverage of the Pope’s funeral live on Sky News from 8am

Here’s a look at the list.

Prince William

The Prince of Wales attended the funeral of Pope Francis on behalf of the King.

The King was in Rome with Queen Camilla earlier this month, and met the pontiff at the Vatican.

The trip came just a week-and-a-half after Buckingham Palace confirmed the King had been taken to hospital following side effects related to his ongoing cancer treatment.

Sir Keir Starmer

Number 10 confirmed the prime minister received an invite and so he attended the ceremony.

Speaking on Tuesday, Sir Keir said there had been “an outpouring of grief and love” for the Pope.

He added: “I think it reflects the high esteem in which he was held, not just by millions and millions of Catholics, but by many others, across the world, myself included.”

Donald Trump

The US president was one of the first to confirm he would be flying to Rome, adding he would be joined by first lady Melania Trump.

Writing on his social media platform Truth Social on Monday, he said: “Melania and I will be going to the funeral of Pope Francis, in Rome. We look forward to being there!”

The Pope had been critical of Mr Trump at times during his tenure.

In January, he said it would be a “disgrace” if the president went ahead with his crackdown on immigration, telling an Italian television station: “It would make the migrants, who have nothing, pay the unpaid bill.

“It doesn’t work. You don’t resolve problems this way.”

Volodymyr Zelenskyy

The Ukrainian president, who met the Pope three times, was also in attendance – and there was an outbreak of applause for him when he arrived.

Mr Zelenskyy has said his country is grieving the Pope and recalled how he often prayed for peace in Ukraine.

Emmanuel Macron

The French President Emmanuel Macron also attended the funeral with his wife Brigitte.

In his tribute on Monday, Mr Macron said of the Pope: “In this time of war and brutality, he had a sense for the other, for the most fragile.”

Giorgia Meloni

The Italian premier, along Argentine leader Javier Milei (below) had place of pride in the seating order for the service.

The Vatican is, of course, surrounded by the Italian capital Rome, while the Pope was born and grew up in Argentina and was once Archbishop of Buenos Aires.

Javier Milei

The president of Pope Francis’s native Argentina was also at the ceremony, despite having launched insults at Francis in recent years.

Before taking office in December 2023, the far-right politician called him “an imbecile, the representative of evil on Earth”.

Mr Milei alluded to their “differences” in his tribute to the late Pope, writing: “It is with profound sorrow that I learned this sad morning that Pope Francis, Jorge Bergoglio, passed away today and is now resting in peace.

“Despite differences that seem minor today, having been able to know him in his goodness and wisdom was a true honour for me.”

Joe Biden

Former US president Joe Biden, 82, was at the funeral with his wife Jill. The couple were seen taking their places in the bright sunshine prior to the service.

Mr Biden appeared to be getting some help to his seat, taking the arm of a member of the church.

Lula da Silva

The Brazilian president and first lady Janja Lula da Silva were also at the funeral.

Brazil had also declared a seven-day mourning period for the Pope.

“Humanity is today losing a voice of respect and welcome for others,” the president said in his tribute.

“Pope Francis lived and propagated in his daily life the love, tolerance and solidarity that are the basis of Christian
teachings.”

Ursula von der Leyen

The EU Commission President confirmed she was attending after calling Francis a worldwide inspiration.

“He inspired millions, far beyond the Catholic Church, with his humility and love so pure for the less fortunate,” she said in her tribute.

Council President Antonio Costa, Parliament President Roberta Metsola was also expected to be in attendance.

Here are some of the other notable attendees:

• Ireland’s taoiseach Micheal Martin
• Spain’s King Felipe and Queen Letizia
• Albanian president Bajram Begaj
• Angola’s president Joao Lourenco
• Austrian president Alexander Van der Bellen
• Bangladesh’s chief adviser and interim leader Muhammad Yunus
• Belgium’s King Philippe and Queen Mathilde, along with prime minister Bart De Wever
• Canada’s governor general Mary Simon
• Cape Verde president Jose Maria Neves
• Croatia’s president Zoran Milanovic
• Cyprian president Nikos Christodoulides
• Czech Republic’s prime minister Petr Fiala
• Democratic Republic of Congo president Felix Tshisekedi
• Dominican Republic’s president Luis Abinader
• East Timor’s president Jose Ramos-Horta
• Ecuador’s president Daniel Noboa
• Estonia’s president Alar Karis
• Finland’s president Alexander Stubb
• Gabon’s president Brice Oligui Nguema
• German president Frank-Walter Steinmeier and outgoing chancellor Olaf Scholz
• Greece’s prime minister Kyriakos Mitsotakis
• Honduras president Xiomara Castro
• Hungary’s president Tamas Sulyok
• Italy’s president Sergio Mattarella and prime minister Giorgia Meloni
• Latvian president Edgars Rinkevics
• Lithuanian president Gitanas Nauseda
• Moldova’s president Maia Sandu
• Netherlands’ prime minister Dick Schoof
• New Zealand’s prime minister Christopher Luxon
• Norway’s Crown Prince Haakon and Crown Princess Mette-Marit
• The Philippines’ president Ferdinand Marcos Jr
• Poland’s president Andrzej Duda
• Portugal’s president Marcelo Rebelo de Sousa and prime minister Luis Montenegro
• Romania’s interim president Ilie Bolojan
• Sweden’s King Carl XVI Gustaf, Queen Silvia and prime minister Ulf Kristersson
• Switzerland’s president Karin Keller-Sutter

Who was not there?

Vladimir Putin

The Russian president did not attend the funeral.

But the controversial leader paid tribute to the Pope, writing a message to Cardinal Kevin Farrell, who is interim chief of the Catholic Church.

“Please accept my most sincere condolences on the passing of His Holiness Pope Francis,” Mr Putin said.

“Throughout the years of his pontificate, he actively promoted the development of dialogue between the Russian
Orthodox and Roman Catholic churches, as well as constructive cooperation between Russia and the Holy See.”

Benjamin Netanyahu

Israeli Prime Minister Benjamin Netanyahu also did not attend the ceremony, with the country’s ambassador Yaron Sideman going instead.

The Jewish state and the Vatican have had strong relations in the past, with Israel sending a presidential delegation to the funeral of Pope John Paul II in 2005, and Pope Francis visiting Israel in 2014.

But their relationship has deteriorated since the start of the war in Gaza.

A month after the conflict started in 2023, a dispute broke out over whether Pope Francis had used the word “genocide” to describe events in Gaza. Palestinians who met with him said he did, but the Vatican said he did not.

The Pope met relatives of Israeli hostages on the same day.

Israeli officials have since lobbied the Vatican to be more forceful in its condemnation of Hamas.

In January, the Pope called the humanitarian situation in Gaza “shameful”, prompting criticism from Rome’s chief rabbi, Riccardo Di Segni, who accused Francis of “selective indignation”.

Rabbi Di Segni said he would be attending the funeral, despite it taking place on the Jewish sabbath.

Was there a seating plan?

The seats were assigned in advance, with the heads of state sitting in French alphabetical order based on their country’s name, rather than on the individual’s.

This applied to everyone apart from the presidents of Italy and Argentina, who got the best seats because the Pope lived in Italy and was an Argentinian native.