OBR slashes UK growth forecast for 2025 but upgrades it for rest of parliament, chancellor says
The Office for Budget Responsibility has halved the UK growth forecast for 2025 from 2% to 1%, Chancellor Rachel Reeves has said.
However, the fiscal watchdog said that while growth has been downgraded for this year, it had been upgraded for every year after for the rest of this parliament – which is due to end in 2029.
The chancellor said she is “not satisfied with the numbers” for this year as she delivered her long-awaited spring statement in the House of Commons this afternoon.
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But, she explained, the OBR has forecast growth to hit 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.
She told MPs: “There are no shortcuts to economic growth. It will take long-term decisions. It will take hard yards. It will take time for the reforms we are introducing to be felt in the every day economy.
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Rachel Reeves has confirmed that the OBR has downgraded the UK’s economic growth forecast for this year from 2% to 1%.
“It is right that the Office for Budget Responsibility consider the evidence and look carefully at measures before recognising a growth impact in their forecast.”
The chancellor pointed to changes to the National Planning Policy Framework, saying mandatory housing targets and bringing “grey belt” land into scope for development will “permanently increase the level of real GDP by 0.2% by 2029-30”.
This will bring an “additional £6.8bn in our economy and by 0.4% of GDP within the next 10 years”, she said.
Ms Reeves also highlighted reforms to the pension system and a national wealth fund, adding it was part of a “serious plan” for economic growth.
Also announced in the spring statement today:
- The budget will move from a deficit of £36.1bn in 2025/26 and £13.4bn in 2026/27, to a surplus of £6bn in 2027/28, £7.1bn in 2028/29 and £9.9bn in 2029/30;
- The Office for Budget Responsibility estimates Labour’s cuts to the welfare budget will save £4.8bn, with changes going further than initially thought;
- Reeves says the health element of universal credit will be cut by half and frozen for new claimants;
- There are no more tax rises today, but the chancellor claims she’ll raise an extra billion pounds by cracking down more on tax evasion;
- Day-to-day spending will be protected, other than the aid budget, with spending increasing above inflation every year;
- The defence budget will get a £2.2bn boost for next year, paving the way for spending eventually hitting 2.5% of GDP;
- House building will hit a 40-year-high thanks to Labour’s planning reforms.
The chancellor confirmed that a voluntary redundancy scheme is set to launch for civil servants as part of her mission to “make government leaner”. She said this will deliver £3.5bn in “day-to-day savings by 2029-30”.
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Sky’s Economics and Data Editor Ed Conway goes through the latest economic data following the chancellor’s spring statement.
Shortly afterwards, Conservative leader Kemi Badenoch accused Labour of financial “chaos”.
She said the spring statement was “all smoke and mirrors”, adding: “I remember the last budget when Rachel Reeves said she was smashing glass ceilings, now it feels like the roof is falling over all our heads.”
A handful of Labour MPs were unimpressed with the moves around welfare, with Debbie Abrahams – the MP for Oldham East and Saddleworth – claiming “all the evidence points to cuts in welfare leading to severe poverty and worsened health conditions”.
An impact assessment into Labour’s welfare reforms, which include narrowing the eligibility criteria for personal independence payments (PIP), found there could be an additional 250,000 people in “relative poverty” by 2030 due to the changes.
Richard Burgon, the Labour MP for Leeds East, said “taking away the personal independence payments” from disabled people is an “especially cruel choice”.
The TON Foundation could have avoided its golden visa controversy in the UAE with a brief legal review, a local lawyer told Cointelegraph.
Politics
Norman Tebbit: Former Tory minister who served in Margaret Thatcher’s government dies aged 94
Norman Tebbit, the former Tory minister who served in Margaret Thatcher’s government, has died at the age of 94.
Lord Tebbit died “peacefully at home” late on Monday night, his son William confirmed.
One of Mrs Thatcher’s most loyal cabinet ministers, he was a leading political voice throughout the turbulent 1980s.
He held the posts of employment secretary, trade secretary, Chancellor of the Duchy of Lancaster and Conservative party chairman before resigning as an MP in 1992 after his wife was left disabled by the Provisional IRA’s bombing of the Grand Hotel in Brighton.
He considered standing for the Conservative leadership after Mrs Thatcher’s resignation in 1990, but was committed to taking care of his wife.
Margaret Thatcher and Norman Tebbit in 1987 after her election victory. Pic: PA
Tory leader Kemi Badenoch called him an “icon” in British politics and was “one of the leading exponents of the philosophy we now know as Thatcherism”.
“But to many of us it was the stoicism and courage he showed in the face of terrorism, which inspired us as he rebuilt his political career after suffering terrible injuries in the Brighton bomb, and cared selflessly for his wife Margaret, who was gravely disabled in the bombing,” she wrote on X.
“He never buckled under pressure and he never compromised. Our nation has lost one of its very best today and I speak for all the Conservative family and beyond in recognising Lord Tebbit’s enormous intellect and profound sense of duty to his country.
“May he rest in peace.”
Lord Tebbit and his wife Margaret stand outside the Grand Hotel in Brighton. Pic: PA
Tory grandee David Davis told Sky News Lord Tebbit was a “great working class Tory, always ready to challenge establishment conventional wisdom for the bogus nonsense it often was”.
“He was one of Thatcher’s bravest and strongest lieutenants, and a great friend,” Sir David said.
“He had to deal with the agony that the IRA visited on him and his wife, and he did so with characteristic unflinching courage. He was a great man.”
Reform leader Nigel Farage said Lord Tebbit “gave me a lot of help in my early days as an MEP”.
He was “a great man. RIP,” he added.
Lord Tebbit as employment secretary in 1983 with Mrs Thatcher. Pic: PA
Born to working-class parents in north London, he was made a life peer in 1992, where he sat until he retired in 2022.
Lord Tebbit was trade secretary when he was injured in the Provisional IRA’s bombing in Brighton during the Conservative Party conference in 1984.
Five people died in the attack and Lord Tebbit’s wife, Margaret, was left paralysed from the neck down. She died in 2020 at the age of 86.
Before entering politics, his first job, aged 16, was at the Financial Times where he had his first experience of trade unions and vowed to “break the power of the closed shop”.
He then trained as a pilot with the RAF – at one point narrowly escaping from the burning cockpit of a Meteor 8 jet – before becoming the MP for Epping in 1970 then for Chingford in 1974.
Lord Tebbit during an EU debate in the House of Lords in 1997. Pic: PA
As a cabinet minister, he was responsible for legislation that weakened the powers of the trade unions and the closed shop, making him the political embodiment of the Thatcherite ideology that was in full swing.
His tough approach was put to the test when riots erupted in Brixton, south London, against the backdrop of high rates of unemployment and mistrust between the black community and the police.
He was frequently misquoted as having told the unemployed to “get on your bike”, and was often referred to as “Onyerbike” for some time afterwards.
What he actually said was he grew up in the ’30s with an unemployed father who did not riot, “he got on his bike and looked for work, and he kept looking till he found it”.
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