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 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.
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Ed Conway examines chancellor’s numbers
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 it, saying the government will increase the number of tax fraudsters charged each year by 20%.
She said 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 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, reforms will only increase the overall housing stock by 0.5% by the end of 2030, falling short of the government’s initial pledge to build 1.5 million houses.
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.
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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.
Patients will be able to get weight loss injections from pharmacies, according to reports.Â
It’s claimed drugs such as Ozempic and Mounjaro could be available over the counter after a short consultation – at the cost of an NHS prescription.
This would broaden access to these jabs considerably, as the health service currently restricts injections to those regarded as having the highest clinical need.
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Weight loss drugs ‘changing way we see obesity’
At the moment, there is a two-year waiting list for Wegovy on the NHS – and last year, research by Sky News showed the rollout is happening far more slowly than planned.
Thousands of people with severe obesity have been denied access to the treatment, with doctors previously claiming that a “soul-destroying” postcode lottery has emerged.
According to the Daily Mail, a multimillion-pound deal for a pilot scheme will be struck with a pharmaceutical firm, with a view to issuing prescriptions through chemists and health centres.
They would be priced at £9.90 – the same as an NHS prescription – and substantially less than the £150-a-month cost of obtaining these injections privately.
But the reports have been described as “speculative”, with health experts warning obesity drugs must only be used under medical supervision by those who are eligible.
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The weight loss drug that’s ‘too good’
A government spokesperson said: “As the government shifts the NHS from sickness to prevention, we will be looking across the board at how these drugs can be made available to more people who can benefit from them.
“The NHS is already tackling obesity in innovative ways, including through community care models and digital technologies, to help deliver these drugs as part of a rounded package of care.”
Previous estimates from the National Institute for Health and Care Excellence (NICE) have suggested that 3.4 million people in England could benefit from weight loss injections.
But last December, NICE said these jabs would only be available to 220,000 patients on the NHS in the first three years – meaning millions of others could end up waiting up to 12 years for treatment.
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‘I need weight loss drug but can’t get it’
Studies show people lose on average 15% of their body weight within months of starting treatment with Wegovy. The drug mimics a natural hormone and people feel fuller faster and for longer.
Obesity costs the NHS £6bn a year and is linked to 200 different diseases.
Half of all obese people with three related problems, such as high blood pressure or diabetes, die within 10 years.
The UK has seen its warmest start to May on record as temperatures soared to over 29C in the spring sunshine.
The Met Office said 29.3C (84.7F) had been recorded at Kew Gardens in southwest London, passing the previous 1 May record of 27.4C (81.3F) set in Lossiemouth in 1990.
Thursday was also the warmest day of the year so far, beating the previous high of 26.7C (80F) reached in Wisley, Surrey, on Wednesday.
Follow latest updates: May record broken
The seafront in Southend-on-Sea. Pic: PA
But the heat is not expected to last for the bank holiday weekend, with cooler weather starting to drift in from the north on Friday.
Temperatures are expected to ease by Friday and Saturday, meaning cooler conditions of 14C to 18C across the UK.
Stephen Dixon, a Met Office spokesman, said: “Temperatures tomorrow will be slightly reduced from what we’ve seen today, possibly 26 or 27 degrees in the far southeast of England through the day tomorrow.”
What has led to the hot spell?
Forecasters said the hot spell has been due to the jet stream remaining stuck north of the country, allowing high pressure to settle.
Last month was also the sunniest April in the UK since records began in 1910, with 47% more sunshine hours than the long-term meteorological average, and the third warmest April on record, according to provisional Met Office figures.
Rainfall was well below average for most of the UK last month, with just 56% of expected totals recorded.
And Tyne and Wear had its second driest April on record, with only 7% of its usual rainfall.
Boy’s body recovered from lake
Meanwhile, the recovery of a 16-year-old boy’s body from a lake in Nottingham prompted emergency services to warn about swimming in lakes and rivers.
Chief Inspector David Mather, of Nottinghamshire Police, said: “I would like to take this opportunity to highlight this case as a reminder of the devastating consequences of entering open water – regardless of whether people do so deliberately or inadvertently.”
A lifeguard at London Fields Lido in east London. Pic: Reuters
The London Fire Brigade said its crews responded to 565 water-related incidents last year and have already attended around 160 in the first quarter of this year, with incidents ranging from rescuing people to animals stranded on lakes and ponds.
‘Water temperatures can be dangerously cold’
Assistant commissioner for prevention and protection Craig Carter said. “Even when the sun is shining, water temperatures can be dangerously cold. Cold water shock can affect anyone, no matter how fit or experienced they are. It can lead to water inhalation, and, in the worst cases, drowning.”
People enjoy their ice creams during in St James’s Park, London. Pic: PA
The Royal National Lifeboat Institution (RNLI) offered similar warnings, advising those planning to swim at a lifeguarded beach to swim between the red and yellow flags.
Fire services warned that the warm weather means there is a “heightened” risk of grass and wildfires which can spread more easily during the dry spell, as firefighters have been battling what they described as a large wildfire in the Peak District.
The RAC also cautioned drivers on the roads, with spokesman Rod Dennis saying breakdowns are expected to “soar”, while the NHS reported searches for hay fever advice had doubled from Monday to Wednesday.
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