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.
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Zhenhao Zou: More than 20 new potential victims come forward after ‘prolific’ rapist jailed for assaulting 10 women
Another 23 female potential victims have reported that they may have been raped by Zhenhao Zou – the Chinese PhD student detectives believe may be one of the country’s most prolific sex offenders.
The Metropolitan Police launched an international appeal after Zou, 28, was convicted of drugging and raping 10 women following a trial at the Inner London Crown Court last month.
Detectives have not confirmed whether the 23 people who have come forward add to their estimates that more than 50 other women worldwide may have been targeted by the University College London student.
Metropolitan Police commander Kevin Southworth said: “We have victims reaching out to us from different parts of the globe.
“At the moment, the primary places where we believe offending may have occurred at this time appears to be both in England, here in London, and over in China.”
Metropolitan Police commander Kevin Southworth
Zou lived in a student flat in Woburn Place, near Russell Square in central London, and later in a flat in the Uncle building in Churchyard Row in Elephant and Castle, south London.
Read more: How a student described as ‘smart and charming’ was unmasked as a prolific sexual predator
He had also been a student at Queen’s University Belfast, where he studied mechanical engineering from 2017 until 2019. Police say they have not had any reports from Belfast but added they were “open-minded about that”.
“Given how active and prolific Zou appears to have been with his awful offending, there is every prospect that he could have offended anywhere in the world,” Mr Southworth said.
“We wouldn’t want anyone to write off the fact they may have been a victim of his behaviour simply by virtue of the fact that you are from a certain place.
“The bottom line is, if you think you may have been affected by Zhenhao Zou or someone you know may have been, please don’t hold back. Please make contact with us.”
Pic: Met Police
Zou used hidden or handheld cameras to record his attacks, and kept the footage and often the women’s belongings as souvenirs.
He targeted young, Chinese women, inviting them to his flat for drinks or to study, before drugging and assaulting them.
Zou was convicted of 11 counts of rape, with two of the offences relating to one victim, as well as three counts of voyeurism, 10 counts of possession of an extreme pornographic image, one count of false imprisonment and three counts of possession of a controlled drug with intent to commit a sexual offence, namely butanediol.
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Moment police arrest rapist student
Mr Southworth said: “Of those 10 victims, several were not identified so as we could be sure exactly where in the world they were, but their cases, nevertheless, were sufficient to see convictions at court.
“There were also, at the time, 50 videos that were identified of further potential female victims of Zhenhao Zou’s awful crimes.
“We are still working to identify all of those women in those videos.
“We have now, thankfully, had 23 victim survivors come forward through the appeal that we’ve conducted, some of whom may be identical with some of the females that we saw in those videos, some of whom may even turn out to be from the original indicted cases.”
Mr Southworth added: “Ultimately, now it’s the investigation team’s job to professionally pick our way through those individual pieces of evidence, those individual victims’ stories, to see if we can identify who may have been a victim, when and where, so then we can bring Zou to justice for the full extent of his crimes.”
Mr Southworth said more resources will be put into the investigation, and that detectives are looking to understand “what may have happened without wishing to revisit the trauma, but in a way that enables [the potential victims] to give evidence in the best possible way.”
The Metropolitan Police is appealing to anyone who thinks they may have been targeted by Zou to contact the force either by emailing survivors@met.police.uk, or via the major incident public portal on the force’s website.
An 11-year-old girl who went missing after entering the River Thames has been named as Kaliyah Coa.
An “extensive search” has been carried out after the incident in east London at around 1.30pm on Monday.
Police said the child had been playing during a school inset day and entered the water near Barge House Causeway, North Woolwich.
A recovery mission is now said to be under way to find Kaliyah along the Thames, with the Metropolitan Police carrying out an extensive examination of the area.
Barge House Causeway is a concrete slope in North Woolwich leading into the Thames
Chief Superintendent Dan Card thanked members of the public and emergency teams who responded to “carry out a large-scale search during a highly pressurised and distressing time”.
He also confirmed drone technology and boats were being used to “conduct a thorough search over a wide area”.
He added: “Our specialist officers are supporting Kaliyah’s family through this deeply upsetting time and our thoughts go out to all those impacted by what has happened.”
“Equally we appreciate this has affected the wider community who have been extremely supportive. You will see extra officers in the area during the coming days.”
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On Monday, Kerry Benadjaoud, a 62-year-old resident from the area, said she heard of the incident from her next-door neighbour, who “was outside doing her garden and there was two little kids running, and they said ‘my friend’s in the water'”.
When she arrived at the scene with a life ring, a man told her he had called the police, “but he said at the time he could see her hands going down”.
Barge House Causeway is a concrete slope that goes directly into the River Thames and is used to transport boats.
Residents pointed out that it appeared to be covered in moss and was slippery.
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