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Chancellor Rachel Reeves is poised to deliver an update on the health of the British economy on Wednesday.

The spring statement is not a formal budget – as Labour pledged to only deliver one per year – but rather an update on the economy and any progress since her fiscal statement last October.

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While it’s not billed as a major economic event, Rachel Reeves has a big gap to plug in the public finances and speculation has grown she may have to break her self-imposed borrowing rules.

Here, Sky News explains everything you need to know.

What is the spring statement?

The spring statement is an annual speech made by the chancellor in the House of Commons, in which they provide MPs with an update on the overall health of the economy and Office for Budget Responsibility (OBR) forecasts.

It is one of two major financial statements in the financial year – which runs from 1 April to 31 March.

The other is the autumn budget, a more substantial financial event in which the chancellor sets out a raft of economic policy for the year ahead.

Typically, the spring statement – which was first delivered by ex-chancellor Phillip Hammond in 2018 – gives an update on the state of the economy, and details any progress that has been made since the autumn budget.

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Sam Coates previews the chancellor’s announcements

What could be announced?

The government has already announced some big cuts – and there may be more to come.

Ms Reeves could decide to extend the freeze on thresholds at which people start to pay different rates of income tax, beyond the current freeze, which is due to end in April 2028.

The government could also raise the relief rate for struggling retail, hospitality, and leisure businesses after cutting it to 40% in the October budget.

The chancellor is expected to announce £400m in spending on the government’s new UK Defence Investment body to “harness UK ingenuity and boost military technology”, according to The Mirror.

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She has been called on to reduce the £20,000 tax-free annual limit on cash ISAs to £4,000 to encourage more people to invest their savings in stocks and shares – a move that could hurt cash ISA savers.

To read more on what is expected to be announced in the Spring Statement, and what has already been announced, check out Sky News political reporter Alix Culbertson‘s piece here.

When will Rachel Reeves deliver it?

The OBR, which monitors the government’s spending plans, will publish its forecast on the UK economy on 26 March.

It is required to produce two economic forecasts a year, but the chancellor said she would only give one budget a year to provide stability and certainty on upcoming tax changes.

The OBR will also provide an estimate on the cost of living for British households, and detail whether it believes the Labour government will adhere to its own rules on borrowing and spending.

The chancellor will then present the OBR’s findings to the House of Commons, and make her first spring statement.

This will be responded to by either Conservative leader Kemi Badenoch or shadow chancellor Mel Stride.

Rachel Reeves attending the Make UK Conference at the QEII Centre.
Pic: PA
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Rachel Reeves is looking to plug gaps in the UK’s finances. Pic: PA

Why does it matter?

The UK economy is thought to be underperforming – potentially due to global factors, like Donald Trump’s trade tariffs – and there are rumours that the chancellor could consider breaking her own rules on borrowing in response.

The economy contracted slightly in January, while inflation has climbed to a 10-month high of 3%. Meanwhile, the government has committed to boosting defence spending to 2.5% of GDP by 2027 – an expensive task.

Ms Reeves’s fiscal rules mean she cannot borrow for day-to-day spending – leaving cuts as one of her only options. Her other “non-negotiable” is to get debt falling as a share of national income by the end of this parliament.

It is expected that welfare cuts will be part of the spring statement package to help the chancellor come within her borrowing limit.

Our deputy political editor Sam Coates said earlier in March there would be a “four-point plan” involving planning reform, Whitehall cuts, regulation cuts and welfare cuts. The government has already announced NHS England will be scrapped.

In short, the Treasury believes Ms Reeves must maintain £10bn in headroom after months of economic downturn and geopolitical events since last October’s budget.

It is widely expected the OBR will confirm that this financial buffer has been wiped clean.

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Where can I watch the spring statement?

The spring statement will be delivered in the House of Commons on Wednesday 26 March, directly after Prime Minister’s Questions, which is usually finished by around 12.30pm.

You’ll be able to keep up to date on Sky News – and follow live updates in the Politics Hub.

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Another tantrum from the Labour backbenches is inevitable

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Rachel Reeves hints at tax rises in autumn budget after welfare bill U-turn

In common with many parents across the country, here’s a conversation that I have with my young daughter on a semi-regular basis (bear with me, this will take on some political relevance eventually).

Me: “So it’s 15 minutes until your bedtime, you can either have a little bit of TV or do a jigsaw, not both.”

Daughter: “Ummmm, I want to watch TV.”

Me: “That’s fine, but it’s bed after that, you can’t do a jigsaw as well.”

Fast-forward 15 minutes.

Me: “Right, TV off now please, bedtime.”

(Pause)

Daughter: “I want to do a jigsaw.”

Now replace me with the government, the TV and jigsaw options with axing welfare cuts and scrapping the two-child cap, and my daughter with rebellious backbenchers.

Politics latest: Former Labour leader calls for wealth tax on assets above £10m

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Rachel Reeves’s fiscal dilemma

That is the tension currently present between Downing Street and Labour MPs. And my initial ultimatum is the messaging being pumped out from the government this weekend.

In essence: you’ve had your welfare U-turn, so there’s no money left for the two-child cap to go as well.

As an aside – and before my inbox fills with angry emails lambasting me for using such a crude metaphor for policies that fundamentally alter the lives of some of the most vulnerable in society – yes, I hear you, and that’s part of my point.

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Welfare U-turn ‘has come at cost’

For many in Labour, this approach feels like the lives of their constituents are being used in a childish game of horse-trading.

So what can be done?

Well, the government could change the rules.

Altering the fiscal rules is – and will likely remain – an extremely unlikely solution. But as it happens, one of Labour’s proverbial grandparents has just popped round with a different suggestion.

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Welfare: ‘Didn’t get process right’ – PM

A wealth tax, Lord Neil Kinnock says, is the necessary outcome of the economic restrictions the party has placed on itself.

Ever the Labour storyteller, Lord Kinnock believes this would allow the government to craft a more compelling narrative about whose side this administration is on.

That could be valuable, given one of the big gripes from many backbench critics is that they still don’t really understand what this prime minister stands for – and by extension, what all these “difficult decisions” are in aid of.

The downside is whether it will actually raise much money.

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Is Corbyn an existential risk to Labour?

The super-rich may have lots of assets to take a slice from, but they also have expensive lawyers ready to find novel ways to keep their client’s cash away from the prying eyes of the state.

Or, of course, they could just leave – as many are doing already.

In the short term, the future is a bit easier to predict.

If Downing Street is indeed now saying there is no money to scrap the two-child cap (after heavy briefing in the opposite direction just weeks ago), an almighty tantrum from the backbenches is inevitable.

And as every parent knows, the more you give in, the harder it becomes to hold the line.

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UK restores diplomatic ties with Syria

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UK restores diplomatic ties with Syria

The UK has re-established diplomatic ties with Syria, David Lammy has said, as he made the first visit to the country by a British minister for 14 years.

The foreign secretary visited Damascus and met with interim president Ahmed al Sharaa, also the leader of the rebel group Hayat Tahrir al-Sham (HTS), and foreign minister Asaad al Shaibani.

It marks the latest diplomatic move since Bashar al Assad’s regime was toppled by rebel groups led by HTS in December.

In a statement, Mr Lammy said a “stable Syria is in the UK’s interests” and added: “I’ve seen first-hand the remarkable progress Syrians have made in rebuilding their lives and their country.

“After over a decade of conflict, there is renewed hope for the Syrian people.

“The UK is re-establishing diplomatic relations because it is in our interests to support the new government to deliver their commitment to build a stable, more secure and prosperous future for all Syrians.”

Foreign Secretary David Lammy shakes hands with Syrian interim president Ahmed al-Sharaa in Damascus. Pic: X / @DavidLammy
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Foreign Secretary David Lammy with Syria’s interim president Ahmed al Sharaa in Damascus. Pic: X / @DavidLammy

The Foreign, Commonwealth and Development Office has also announced a £94.5m support package for urgent humanitarian aid and to support the country’s long-term recovery, after a number of British sanctions against the country were lifted in April.

While HTS is still classified as a proscribed terror group, Sir Keir Starmer said last year that it could be removed from the list.

The Syrian president’s office also said on Saturday that the president and Mr Lammy discussed co-operation, as well as the latest developments in the Middle East.

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Since Assad fled Syria in December, a transitional government headed by Mr al Sharaa was announced in March and a number of western countries have restored ties.

In May, US President Donald Trump said the United States would lift long-standing sanctions on Syria and normalise relations during a speech at the US-Saudi investment conference.

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From May: Trump says US will end sanctions for Syria

He said he wanted to give the country “a chance at peace” and added: “There is a new government that will hopefully succeed.

“I say good luck, Syria. Show us something special.”

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Secret Service seizes $400M in crypto, cold wallet among world’s largest

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Secret Service seizes 0M in crypto, cold wallet among world’s largest

Secret Service seizes 0M in crypto, cold wallet among world’s largest

Secret Service quietly amasses one of the world’s largest crypto cold wallets with $400 million seized, exposing scams through blockchain sleuthing and VPN missteps.

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