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.
Politics latest: Follow live updates
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.
Some of the biggest US technology companies have pledged billions of pounds of investment to turbocharge Britain’s artificial intelligence (AI) industry, as the two countries announce a landmark technology deal.
Nvidia, Microsoft, Open AI and Google made a flurry of announcements to coincide with President Trump‘s state visit to the UK.
They include plans to build data centres and invest in AI research and engineering.
Money latest: Tax warning over state pension
Sir Keir Starmer described the agreement, which both leaders will sign over the coming days, as “a generational step change” in Britain’s relationship with the US.
The deal will see both countries cooperate on AI, quantum computing and nuclear energy, with investment in modular reactors revealed earlier this week.
Please use Chrome browser for a more accessible video player
Energy boss makes case for nuclear future
The prime minister said it was “shaping the futures of millions of people on both sides of the Atlantic, and delivering growth, security and opportunity up and down the country”.
The government said the deal would deliver thousands of jobs, with a new AI Growth Zone in the North East of England earmarked for 5,000 jobs.
The region will host a new data centre developed in partnership with ChatGPT developer OpenAI, the US chip giant Nvidia and the British data centre company Nscale. The UK government will supply energy for the project, which will be based in Blyth.
Jensen Huang, chief executive of Nvidia, who has previously drawn attention to Britain’s inadequate levels of digital infrastructure, said: “Today marks a historic chapter in US-United Kingdom technology collaboration.
“We are at the Big Bang of the AI era – and the United Kingdom stands in a Goldilocks position, where world-class talent, research and industry converge.”
Nvidia chief executive Jensen Huang. Pic: Reuters
The Blyth data centre is part of Stargate, Open AI’s infrastructure project to build large data centres across the US.
The company has also developed sites in Norway and the UAE. Nvidia, which provides the graphic processing chips (GPUs), expects to generate $20bn (£14.6bn) by the end of this year from “sovereign” deals with national governments over the coming years.
Sam Altman, OpenAI’s chief executive, said: “The UK has been a longstanding pioneer of AI, and is now home to world-class researchers, millions of ChatGPT users and a government that quickly recognised the potential of this technology.
“Stargate UK builds on this foundation to help accelerate scientific breakthroughs, improve productivity, and drive economic growth.”
Read more from Sky News:
How most people are using ChatGPT
NHS medicines bill ‘should rise to preserve UK drug industry’
Microsoft also pledged £22bn, its largest ever investment in the UK, to expand data centres and construct the country’s largest AI supercomputer.
Meanwhile, Google owner Alphabet pledged £5bn to expand its data centres in Hertfordshire and fund its London-based subsidiary DeepMind, which uses AI to power cutting edge scientific research. The company was founded in Britain and acquired by Google in 2014.
Other investments include £1.5bn from AI cloud computing company CoreWeave and £1.4bn from Salesforce.
There are “no discussions around taxpayers’ money” to prop up Jaguar Land Rover’s (JLR) suppliers, according to the prime minister’s official spokesman, as the carmaker grapples a lengthening production shutdown following last month’s cyber attack.
JLR factories fell silent more than two weeks ago. While it is damaging for the company, it represents a perilous loss of business for the supply chain which has also been forced to send workers home.
Some have already lost their jobs.
Unions and the business and trade committee of MPs were among those to request the possibility of aid to prevent job losses and employers going bust as the disruption drags on.
Money latest: Tax warning over state pension
What happened?
It was revealed on 1 September that global production at JLR had been stopped following a cyber attack.
IT systems were taken offline by the company under efforts to limit penetration and damage.
The company appeared confident initially that manufacturing could resume but restart dates have been consistently put back.
What damage was done?
Jaguar Land Rover has said very little about the extent of the attack.
But it admitted last week that some data had been accessed. It gave no further details.
Who is to blame?
A criminal investigation is continuing.
A group of English-speaking hackers claimed responsibility for the JLR attack via a Telegram platform called Scattered Lapsus$ Hunters, an amalgamation of the names of hacking groups Scattered Spider, Lapsus$ and ShinyHunters.
Scattered Spider, a loose group of relatively young hackers, were behind the Co-Op, Harrods and M&S attacks earlier in the year.
It is widely believed that M&S paid a sum to regain control of its systems after it was targeted with ransomware though it has refused to confirm if this was the case.
How is this affecting JLR as a business?
The business was highly profitable last year but 2025 has seen new trade war challenges in addition to the cyber attack: File pic: Reuters
JLR typically produces about 1,000 vehicles a day.
Production staff are being paid but kept away from plants at Halewood on Merseyside, Solihull in the West Midlands, and its engine factory in Wolverhampton. It is the same story for workers at sites in Slovakia, China and India.
JLR revealed on Tuesday that production lines would now remain shut until at least 24 September.
David Bailey, professor of business economics at the Birmingham Business School, told the PA news agency: “The value of cars usually made at the sites means that around £1.7bn worth of vehicles will not have been produced, and I’d estimate that would have an initial impact of around £120m on profits.”
JLR achieved a pre-tax profit of £2.5bn for the financial year ending 31 March 2025, so should be able to absorb such a hit.
Sales and service operations continue as normal at its retail partners but the longer the disruption goes on, so do the risks to its inventories and bottom line.
Why does its supply chain need help?
JLR’s supply chain includes everything from components to paint. Pic: Reuters
This is the part of the operation that was always bound to suffer most in the event of a global JLR production shutdown.
No manufacturing means no need for parts.
The company usually depends on a ‘just in time’ supply chain to feed its factories and keep production lines running smoothly.
The Unite union has appealed for a COVID-style furlough scheme to prevent job losses and the risk of affected companies, often small or medium-sized firms, being forced out of business.
JLR’s operations are understood to directly support more than 100,000 jobs in the UK though that sum doubles through indirect roles.
The loss of any major supplier would risk further production delays once JLR’s IT systems are back online.
It is currently understood that the vast majority of directly affected workers remain in their jobs but have either been sent home or are on restricted tasks.
JLR suppliers Evtec, WHS Plastics, SurTec and OPmobility have had to temporarily lay off roughly 6,000 staff while a growing number of other firms are cutting workers, with temporary or contracted workers most likely to be affected.
What has the government said?
In addition to the remarks by the PM’s official spokesman, minister for industry Chris McDonald told Sky News: “We know this is a worrying time for those affected by this incident and our cyber experts are supporting JLR to help them resolve this issue as quickly as possible.
“I met the company today to discuss their plans to resolve this issue and get production started again, and we continue to discuss the impact on the supply chain.”
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoButton battles heat exhaustion in NASCAR debut
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment12 months agoHere are the best electric bikes you can buy at every price level in October 2024