Spring statement 2025 key takeaways
Rachel Reeves has delivered her much anticipated spring statement today.
The chancellor’s 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.
Ms Reeves told MPs “the world has changed” since her first budget just under five months ago, and that was to blame for the string of cuts and downgrades she outlined in the Commons.
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But critics have said today’s update is a direct consequence of her decisions since taking office in July.
Here are the key takeaways from the spring statement:
The Office for Budget Responsibility (OBR) has halved the UK growth forecast for 2025 from 2% to 1%, Ms Reeves said, adding that she was “not satisfied with these numbers”.
She explained that the government’s 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.
While the short-term growth forecasts appear gloomy, the chancellor said the OBR predicts the economy will be “larger” by the end of the forecast compared with the time of her first budget as a result of her decisions.
The OBR expects output to grow 1% in 2025, by 1.9% next year, 1.8% in 2027, 1.7% in 2028 and by 1.8% in 2029.
On living standards, real household disposable income per person is expected to grow by an average of around 0.5 percentage points a year from 2025-26 to 2029-30, led by stronger wage growth and inflation starting to fall later in the forecast period.
Ms Reeves said disposable income will “grow this year at almost twice the rate expected in the autumn”, adding: “Households will be on average over £500 a year better off under this government.”
The chancellor announced further welfare cuts after being told the reforms announced last week will save less than planned – £3.4bn instead of £5bn.
Among the latest changes to welfare spending, Ms Reeves said the universal credit health element would be cut by 50% and frozen for new claimants rather than rising in line with inflation.
However, the universal credit standard allowance will increase from £92 per week in 2025-26 to £106 per week by 2029-30. The changes will mean a further 150,000 people will not receive carer’s allowance or the carer element of universal credit, according to the government’s own impact assessment.
The OBR has estimated the new welfare savings package will save £4.8bn.
Cuts to welfare will mean 250,000 more people – including 50,000 children – will be pushed into poverty by 2030, the government’s assessment predicts.
Separately, 800,000 people will not receive the daily living component personal independence payment (PIP) – due to tightening eligibility rules.
The chancellor pledged to “boost Britain’s defence industry and to make the UK a defence industrial superpower”.
She confirmed the government’s pledge to spend 2.5% of GDP by 2027.
The Ministry of Defence will get an additional £2.2bn next year, the chancellor said, which will be spent on new high-tech weaponry, upgrading HM Naval Base in Portsmouth, and refurbishing military family homes, among other things.
The commitment is fully funded, with cash coming from Treasury reserves and also from the decision to slash foreign aid funding.
Ms Reeves said the statement does not contain any further tax increases, but highlighted work that needs to be done to tackle tax evasion.
She announced steps to crack down on tax evasion, saying that the government will increase the number of tax fraudsters charged each year by 20%.
She says that reducing tax evasion will raise an extra £1bn for the economy.
On departmental budgets – which dictate how much different parts of government can spend until 2030 – Ms Reeves said she aims to make the state “leaner and more agile”.
The chancellor also confirmed that a voluntary redundancy scheme is set to launch for civil servants, saying this will deliver £3.5bn in “day-to-day savings by 2029-30”.
Government spending will now grow by an average of 1.2% a year above inflation, compared with 1.3% in the autumn.
Planning reforms will see house building reach a more than 40-year high by 2030, the chancellor said.
She said the OBR has forecast that the government’s reforms to cut planning red tape will boost house building by 170,000 over the next five years, to 305,000.
This would put the government on track to add around 1.3 million to Britain’s stock of homes in the UK, a rise of 16%, by the end of Parliament.
However, it will fall short of its initial target of 1.5 million houses, the OBR warned, adding that planning reforms will only increase the overall housing stock by 0.5% by the end of 2030.
How have the markets reacted?
The reaction of financial markets to a fiscal event is important, particularly as a poorly received speech can add to government borrowing costs on the bond markets.
The good news for the chancellor here is that yields – the premium demanded by investors to hold UK government debt – dipped slightly in the wake of her remarks.
The yield for UK 30-year bonds, known as gilts, eased by almost 0.1 percentage points to 5.283%.
Similar, but smaller, declines were seen for their 10 and two year counterparts.
The only other market reaction to speak of was a dip in the value of the pound which lost three tenths of a cent against the dollar and the euro.
The grieving mother of a Scottish teenager who vanished for almost five weeks has told Sky News she believes a “third party” was involved in her son’s death – but police say there’s “no evidence” of that.
Cole Cooper, 19, was discovered dead in woods near Falkirk earlier this month following a missing persons inquiry his relatives don’t believe was taken seriously enough by police.
He was last seen on CCTV in May after leaving a house party, but police later revealed a former school friend had spoken to Cole a few days later nearby.
Speaking exclusively to Sky News, his mother Wendy Stewart, 42, revealed her son had “various arguments” in the days and hours before he disappeared.
Cole’s mum Wendy (L) and his aunt Aimee
In an emotional interview, she said: “He was only 19, he should never have been taken. I am never going to see him again. I never got a chance to give him a last cuddle and hold his hand.
“Someone has taken that away from me far too soon. Whether it be intentionally or unintentionally, I do believe there has been some involvement by a third party and the result is the death of Cole.”
The family, who organised a local vigil in Cole’s memory last weekend, have vowed to get “justice”.
Asked what that means, Ms Stewart told Sky News: “Finding the culprit and getting justice that way. Finding the person that is responsible for the death of my child.”
Police previously said 400 residents were spoken to during door-to-door enquiries and more than 2,000 hours of CCTV footage was collected.
The 19-year-old’s death is being treated as “unexplained”, with a top police officer saying “at this time there is no evidence of any third party involvement”.
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A vigil was held in Banknock for Cole Cooper. Pic: PA
Cole’s aunt Aimee Tennie, 32, revealed the family’s anger over the police handling of the case as they attempt to find out what happened.
She said: “We are aware of small details surrounding the weekend leading up to it with arguments. He had a few arguments over that weekend. We want the details re-examined thoroughly.”
Sky News put all of the family’s concerns and allegations to Police Scotland.
The force initially swerved our questions and responded saying: “Enquiries remain ongoing.”
In an update later on Wednesday morning, Detective Chief Inspector Bob Williamson said: “We are carrying out significant enquiries into Cole’s death, however, at this time there is no evidence of any third party involvement.
“It is vital that we establish the full circumstances leading up to Cole’s death so that we can provide some answers to his family.
“The thoughts of everyone involved in this investigation are very much with his family and friends and officers will continue to offer them support and keep them informed as our enquiries progress.”
Ms Stewart claimed the probe has been handled “shockingly” with a failure to take her son’s disappearance seriously.
The 42-year-old said: “I have had to scream and shout from rooftops to be heard by the police. I don’t think they have handled it well.
“The police really need to take accountability and listen to families, they are reporting a missing child and understand the family knows their child best.”
Cole’s loved ones still have not been told when his body will be released to allow them to lay him to rest.
A member of Irish-language rap group Kneecap has appeared in court in London after being charged with a terror offence – as hundreds of protesters gathered outside.
Liam O’Hanna, or Liam Og O hAnnaidh, is accused of displaying a flag in support of Hezbollah, a proscribed organisation in the UK, at a gig last year.
The charge against the 27-year-old, from Belfast, was brought last month after counter-terror officers assessed a video reported to be from a Kneecap concert at the O2 Forum in Kentish Town, London, on 21 November 2024.
O hAnnaidh arrived at Westminster Magistrates’ Court on Wednesday with bandmates Naoise O Caireallain and JJ O Dochartaigh, as a crowd of fans and supporters gathered with placards and flags outside.
O’Hanna (centre) arrived at court with his bandmates, including Naoise O Caireallain (below). Pics: PA
During a short appearance, O hAnnaidh confirmed his name and address, and was released on unconditional bail until his next hearing on 20 August.
Chief Magistrate Paul Goldspring told him he must attend court on that day.
Kneecap released their first single in 2017 and rose to wider prominence in 2024 following the release of their debut album and award-winning eponymous film – a fictionalised retelling of how the band came together and their fight to save the Irish language.
The group are known for their provocative lyrics and merchandise – and have been vocally opposed to Israel’s military action in Gaza.
O hAnnaidh performs under the stage name Mo Chara, while O Caireallain is known as Moglai Bap, and O Dochartaigh as DJ Provai.
Pic: PA
They have built a following for their hedonistic anti-establishment tracks, but their outspoken stance has proved polarising – prompting a surge in streaming for their songs and, at the same time, resulting in several of their gigs being cancelled this year.
Last year, they won a discrimination case against the UK government after Conservative leader Kemi Badenoch tried to refuse them a £14,250 funding award when she was business secretary.
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