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.
UK
More than 500 people arrested after Palestine Action protest – with almost half aged 60 and above
The number of people arrested after a protest in London on Saturday supporting banned group Palestine Action has risen to 532, police have said.
Around half of them (259) were aged 60 and above – including almost 100 people who were in their 70s.
Some 522 arrests were for displaying a placard in support of a proscribed organisation contrary to Section 13 of the Terrorism Act 2000, according to the Metropolitan Police.
As of 9pm on Saturday, the number was put at 466.
Membership of, or support for, Palestine Action is a criminal offence punishable by up to 14 years in prison under the Terrorism Act.
A rally supporting Palestine Action in Parliament Square. Pic: Reuters
One of the arrests took place as the Palestine Coalition march formed in Russell Square, while 521 were at the protest in Parliament Square.
Of those arrested, the biggest number (147) was in the 60-69 age group, while 97 people were aged between 70 and 79, and 15 others were between 80-89.
Six were aged 17-19, sixty-five were in the 20-29 age group, 55 were aged 30-39, 45 were aged 40-49 and 89 were in the 50-59 age group.
The average age of those arrested was 54, while some 263 of those arrested were male, 261 were female and eight either defined themselves as non-binary or did not disclose their gender.
Among the arrests, six were for assaults on officers (none were seriously injured), one was for “obstructing a constable in the execution of his/her duty”, two were for breaching Section 14 Public Order Act conditions, and one was for a racially aggravated public order offence.
People attend the protest in central London. Pic: PA
Hundreds of people attended Saturday’s demonstration in Parliament Square, organised by Defend Our Juries, with the Metropolitan Police warning it would arrest anyone expressing support for Palestine Action.
Anyone who was arrested as part of the operation was taken to one of two prisoner processing points in the Westminster area.
Those whose details could be confirmed were released on bail to appear at a police station at a future date. They were given conditions not to attend future demonstrations related to Palestine Action.
Those who refused to provide their details at the prisoner processing points and those who were found to have been arrested while already on bail, were taken to one of a number of Met Police custody suites.
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Charity Amnesty International described the mass arrests under UK terrorism law as “deeply concerning”.
The crowd, sat on the grass inside Parliament Square, could be seen writing “I oppose genocide, I support Palestine Action” on white placards at 1pm, with the vast majority remaining silent.
Meanwhile on Sunday, hundreds of people joined a march on Downing Street to urge the release of those being held in Gaza by Palestinian militant group Hamas.
A scuffle broke out after at least two men shouted “Free Palestine” in front of the march.
One man was seen being bundled to the ground close to Trafalgar Square after being surrounded by around a dozen people.
Another man was seen being moved away by police officers after he began shouting.
Amnesty International says it is “deeply concerning” that police made 474 arrests during a Palestine Action demonstration in London.
Metropolitan Police said 466 were detained under the Terrorism Act for showing support for a banned group.
Eight more people were arrested for other offences, including five for assaulting officers.
The Met said it was the most arrests it’s made related to a single operation in at least the past decade.
Pic: PA
Organiser of the event, Defend Our Juries, earlier said up to 700 people were at the event in Parliament Square and claimed police were preparing for the “largest mass arrest in their history”.
The group said those arrested included former Guantanamo Bay detainee Moazzam Begg, NHS workers, quakers and a blind wheelchair user.
Amnesty International UK’s chief executive Sacha Deshmukh said in a statement: “The protesters in Parliament Square were not inciting violence and it is entirely disproportionate to the point of absurdity to be treating them as terrorists.
“Instead of criminalising peaceful demonstrators, the government should be focusing on taking immediate and unequivocal action to put a stop to Israel’s genocide and ending any risk of UK complicity in it.”
The Met said a “significant number of people” at the event were seen “displaying placards expressing support for Palestine Action”.
Home Secretary Yvette Cooper said: “The right to protest is one we protect fiercely but this is very different from displaying support for this one specific and narrow, proscribed organisation.
“Palestine Action was proscribed based on strong security advice following serious attacks the group has committed, involving violence, significant injuries and extensive criminal damage.”
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Palestine Action supporters arrested at protest
Police said those arrested had been taken to processing points in Westminster and any whose details could be confirmed were bailed on condition they didn’t attend further Palestine Action support events.
Others whose details could not be verified, possibly because they refused to give them, were taken to custody suites across London.
Pic: PA
The protests have put a strain on authorities’ capacity to cope.
Sky News understands senior leaders in the prison service, known as “Capacity Gold”, met today to discuss how to deal with the large number of arrests as the male prison estate is close to full.
It’s understood 800 inmates were moved out of the busiest jails in and around London beforehand.
In a statement, the Metropolitan Police Federation said: “Thinking of our colleagues and wishing all assaulted officers well. Remember there are no ‘extra’ police officers – just the same ones having their days off cancelled, having to work longer shifts and being moved from other areas. Officers are emotionally and physically exhausted.”
Read more: What does proscribing a group mean?
Legislation to ban Palestine Action came into force on 5 July, making it a criminal offence to show support for the organisation, carrying a prison sentence of up to 14 years.
Defend Our Juries said earlier this week the protest would still go ahead, following several similar demonstrations since it was outlawed last month.
On Saturday, a spokesperson said: “Palestine Action and people holding cardboard signs present no danger to the public at large.”
Pic: PA
Human rights advocates Amnesty International described the arrests of so many people under UK terrorism law as “deeply concerning”.
Another march organised by the Palestine Coalition, which is a separate group, set off from Russell Square and assembled on Whitehall.
The Met Police said one person had been arrested there for showing a placard in support of Palestine Action.
Pic: Reuters
Earlier this week, three people charged as a result of illegal Palestine Action activity were named.
Jeremy Shippam, 71, of West Sussex, Judit Murray, also 71, of Surrey, and Fiona Maclean, 53, of Hackney in east London, will appear at Westminster Magistrates’ Court on 16 September.
The ban on Palestine Action faces a legal challenge in November after the High Court granted a full judicial review to Palestine Action co-founder Huda Ammori.
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