Spring statement: Rachel Reeves can make decisions on spending cuts without too much fallout for now – but worse could be yet to come
Rachel Reeves will keep her remarks short when she delivers the spring statement on Wednesday.
But the enormity of what she is saying will be lost on no one as the chancellor sets out the grim reality of the country’s finances.
Her economic update to the House of Commons will reveal a deteriorating economic outlook and rising borrowing costs, which has forced her to find spending cuts, which she’s left others to carry the can for (more on that in a bit).
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The independent Office of Budget Responsibility (OBR) is expected to forecast that growth for 2025 has halved from 2% to 1%.
That, combined with rising debt repayment costs on government borrowing, has left the chancellor with a black hole in the public finances against the forecasts published at the budget in October.
Back then, Reeves had a £9.9bn cushion against her “iron-clad” fiscal rule that day-to-day spending must be funded through tax receipts not debt by 2029-30.
But that surplus has been wiped out in the ensuing six months – now she finds herself about £4bn in the red, according to those familiar with the forecasts.
That’s really uncomfortable for a chancellor who just months ago executed the biggest tax and spend budget in a generation with the promise that she would get the economy growing again.
At the first progress check, she looks to be failing and has been forced into finding spending cuts to make up the shortfall after ruling out her other two options – further tax rises or more borrowing via a loosening of her self-imposed fiscal rules.
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What to expect in the spring statement
‘World has changed’
When Reeves gets up on Wednesday, she will put it differently, saying the “world has changed” and all that means is the government must move “further and faster” to deliver the reforms that will drive growth.
But her opponents will be quick to lay economic woes at her door, arguing that the unexpected £25bn tax hike on employers’ national insurance contributions last October have choked off growth.
But it’s not just opposition from the Conservative benches that the chancellor is facing – it is opposition from within as she sets about cutting government spending to the tune of £15bn to fill that black hole.
Politically, her allies know how awkward it would have been for the chancellor to announce £5bn in welfare cuts to avoid breaking her own fiscal rules, with one acknowledging that those cuts had to be kept separate from the spring statement.
There’s also expected to be more than £5bn of extra cuts from public spending in the forecast period, which could see departments that don’t have protected budgets – education, justice, home – face real-term spending cuts by the end of the decade.
Pic: PA
Not an emergency budget
We won’t see the detail of that until the Spending Review in June.
This is not an emergency budget because the chancellor isn’t embarking on a round of tax raising to fix the public finances.
But these are, however they are framed, emergency spending cuts designed to plug her black hole and that is politically difficult for a government that has promised no return to austerity if some parts of the public sector face deep cuts to stick with fiscal rules.
If that’s the macro picture, what about the “everyday economics” of peoples’ lives?
I’d point out two things here. On Wednesday, we will get to see where those £5bn of welfare cuts will fall as the government publishes the impact assessment that it held back last week.
Read more:
Corbyn brands benefit cuts a ‘disgrace’
Expect different focus from Reeves at spring statement
Up to a million people could be affected by cuts, and the reality of who will be hit will pile on the pressure for Labour MPs already uncomfortable with cuts to health and disability benefits.
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Benefits cuts explained
The second point is whether the government remains on course to deliver its key pledge to “put more money in the pockets of working people” during this parliament after the Joseph Rowntree Foundation think-tank produced analysis over the weekend saying living standards for all UK families are set to fall by 2030.
The chancellor told my colleague Trevor Phillips on Sunday that she “rejects” the analysis that the average family could be £1,400 worse off by 2030.
But that doesn’t mean that the forecasts published on Wednesday calculating real household disposable income per head won’t make for grim reading as the economic outlook deteriorates.
Nervousness in Labour
Ask around the party, and there is obvious nervousness about how this might land, with a degree of anxiety about the economic outlook and what that has in store for departmental budgets.
But there is recognition too from many MPs that the government has political space afforded by that whopping majority, to make these decisions on spending cuts without too much fallout – for now.
Because while Wednesday will be bad, worse could be yet to come.
Staring down the barrel
The chancellor is staring down the barrel of a possible global trade war that will only serve to create more economic uncertainty, even if the UK is spared from the worst tariffs by President Donald Trump.
The national insurance hike is also set to kick in next month, with employers across the piece sounding the warnings around investment, jobs and growth.
Six months ago, Reeves said she wouldn’t be coming back for more after she announced £40bn in tax rises in that massive first budget.
Six months on she is coming back for more, this time in the form of spending cuts. And in six months’ time, she may well have to come back for more in the form of tax rises or deeper cuts.
The spring statement was meant to be a run-of-the-mill economic update, but it has morphed into much more.
The chancellor now has to make the hard sell from a very hard place, that could soon become even tougher still.
Police are investigating after a “number of people” were believed to have been attacked with pepper spray by a group of men who then fled.
Officers were called at 8.11am to a multi-storey car park at Terminal 3 following reports of multiple people being assaulted, said the Metropolitan Police.
A statement by the force said: “A number of people were sprayed with what is believed to be a form of pepper spray by a group of men who then left the scene.”
What we know so far
• Several assaulted with ‘pepper spray’
• One arrest – police hunt for more suspects
• Incident said to involve people known to each other
• Incident not being treated as terrorism
• 21 people treated by ambulance service – five taken to hospital
• Injuries not believed to be life-threatening
• Traffic disruption reported – but train lines since reopened
Live updates on Heathrow incident
Fire engines responding to the incident at Heathrow Airport. Pic: @_umarjaved
Armed police attended and one man was arrested on suspicion of assault. He remains in custody and enquiries continue to trace further suspects.
Police are not treating the Heathrow incident as terrorism.
London Ambulance Service also attended the scene and treated 21 people, including five who were taken to hospital. Their injuries are not believed to be life-changing or life-threatening.
There is currently some disruption to traffic in the area and Terminal 3 remains open.
Increased police presence
Commander Peter Stevens said: “At this stage, we believe the incident involved a group of people known to each other, with an argument escalating and resulting in a number of people being injured.
“Our officers responded quickly and there will be an increased police presence at Heathrow Airport throughout the morning, to continue enquiries and ensure the safety of those in the area.
“We are not treating this incident as terrorism. I understand the public’s concerns and would like to thank those in the area for their cooperation this morning.”
A person is detained at the airport. Pic: @_umarjaved
‘Significant incident’
The London Ambulance Service said a “significant incident” was declared.
There was a “full deployment” of resources and the ambulance service is treating it as ongoing.
A London Fire Brigade spokesperson said: “We were called at 8.14am today to assist emergency service colleagues at an incident near Terminal 3 at Heathrow Airport. Firefighters remain at the scene.”
Heathrow is advising passengers to allow extra time when travelling to the airport and to check with their airline for any queries.
There was disruption to train and Tube services, with some delays on the Elizabeth Line and the Piccadilly Line.
National Rail said on its website that lines had been reopened allowing trains to call at Heathrow “following the emergency services dealing with an incident at the airport”.
It said: “Although lines have now reopened, disruption is expected to continue whilst services return to normal, delays of up to 10 minutes and cancellations can be expected until 11.45am.”
National Highways East said on X: “A serious incident within the @HeathrowAirport Tunnel has resulted in the closure of the #M4 spur road southbound between M4 and J4A.
“@metpoliceuk responding. We’ll keep you updated.”
It later said: “Incident has been resolved and all closures lifted on the #M4 southbound @HeathrowAirport spur road between #M4 and J4A.”
People on social media have reported vehicles were being searched at the airport.
A user on X said there was a “major backlog of cars unable to leave the vicinity or enter the drop-off zone” at Terminal 3.
In footage on X, several armed police were seen in a car park.
England and Scotland fans have found out where their World Cup group games will be played when the tournament kicks off in June.
England, who are in Group L, will begin their tournament against Croatia in Dallas at 4pm EST (9pm BST) on 17 June. They will then go on to face Ghana in Boston at 4pm EST (9pm BST) on 23 June and Panama in New Jersey, New York, at 5pm EST (10pm BST) on 27 June.
Scotland are in Group C, and their first match will be against Haiti in Boston at 9pm EST on 13 June (2am GMT the following morning).
They will go up against Morocco also in Boston at 6pm EST (11pm GMT) on 19 June and then Brazil in Miami at 6pm EST (11pm GMT) on 24 June.
Fans are expected to rush to sort their travel and accommodation plans now that they know where and when the matches take place.
Read more: Unapologetically political – a World Cup draw like no other
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England and Scotland learn World Cup fate
Wales and Northern Ireland have yet to find out if they will qualify.
Wales must face a play-off against Bosnia and Herzegovina in Cardiff, then either Italy or Northern Ireland, if they are victorious.
If they beat these play-off opponents, they will secure their place in Group B alongside Canada, Qatar and Switzerland.
However, Northern Ireland will also be vying to guarantee their spot in the same group if they can beat Italy and then either Wales or Bosnia and Herzegovina.
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UK
World Cup 2026 – who England, Scotland, Wales, Northern Ireland and the Republic of Ireland will play
Scotland and England now know who they will face in the group stage of the next summer’s world cup.
But the fates of Northern Ireland, the Republic of Ireland and Wales won’t be determined until they compete in pre-tournament play-off matches in March.
England are in Group L along with Croatia, Panama and Ghana. Their first match will be against Croatia, who beat them in the semi-finals of the 2018 World Cup in Russia.
Pic: Reuters
Scotland’s first match will be against Haiti, in Group C.
Brazil and Morocco are the other Group C teams – both countries were also in the same opening group as Scotland in the 1998 World Cup in France.
Trump and Infantino at the World Cup draw
Wales have yet to find out if they will qualify as they must face a play-off against Bosnia and Herzegovina in Cardiff, and then either Italy or Northern Ireland, if they are victorious.
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If they can overcome these play-off opponents then they will secure their place in Group B along with Canada, Qatar and Switzerland. But Northern Ireland will also be vying and hoping to guarantee their spot in the same group if they can beat Italy and then either Wales or Bosnia and Herzegovina.
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‘Bring it on!’: Scotland fans react to World Cup draw
The Republic of Ireland also need to get through the play-offs first and are paired against the Czech Republic for their semi-final. Should Ireland win that match, they will need to beat either North Macedonia or Denmark to get to the finals where an opening group containing joint hosts Mexico, South Africa and South Korea awaits.
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