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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).

Politics Live: Polling suggests almost everyone is pessimistic

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.

More on Rachel Reeves

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
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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.

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Mandelson appointment was ‘worth the risk’ despite ‘strong relationship’ with Epstein, says minister

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Mandelson appointment was 'worth the risk' despite 'strong relationship' with Epstein, says minister

Appointing Lord Mandelson as the UK’s ambassador to the US was “worth the risk”, a minister has told Sky News.

Peter Kyle said the government put the Labour peer forward for the Washington role, despite knowing he had a “strong relationship” with convicted sex offender Jeffrey Epstein.

It is this relationship that led to Peter Mandelson being fired on Thursday by the prime minister.

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Lord Mandelson and Jeffrey Epstein. File pic
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Lord Mandelson and Jeffrey Epstein. File pic

But explaining the decision to appoint Lord Mandelson, Business Secretary Mr Kyle said: “The risk of appointing [him] knowing what was already public was worth the risk.

“Now, of course, we’ve seen the emails which were not published at the time, were not public and not even known about. And that has changed this situation.”

Speaking to Sunday Morning with Trevor Phillips, he rejected the suggestion that Lord Mandelson was appointed to Washington before security checks were completed.

More on Peter Mandelson

He explained there was a two-stage vetting process for Lord Mandelson before he took on the ambassador role.

The first was done by the Cabinet Office, while the second was a “political process where there were political conversations done in Number 10 about all the other aspects of an appointment”, he said.

This is an apparent reference to Sir Keir Starmer asking follow-up questions based on the information provided by the vetting.

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‘We knew it was a strong relationship’

These are believed to have included why Lord Mandelson continued contact with Epstein after he was convicted and why he was reported to have stayed in one of the paedophile financier’s homes while he was in prison.

Mr Kyle said: “Both of these things turned up information that was already public, and a decision was made based on Peter’s singular talents in this area, that the risk of appointing knowing what was already public was worth the risk.”

Mr Kyle also pointed to some of the government’s achievements under Lord Mandelson, such as the UK becoming the first country to sign a trade deal with the US, and President Donald Trump’s state visit next week.

Mr Kyle also admitted that the government knew that Lord Mandelson and Epstein had “a strong relationship”.

“We knew that there were risks involved,” he concluded.

PM had only ‘extracts of emails’ ahead of defence of Mandelson at PMQs – as Tories accuse him of ‘lying’

Speaking to Sky News, Kyle also sought to clarify the timeline of what Sir Keir Starmer knew about Lord Mandelson’s relationship with Epstein, and when he found this out.

It follows Conservative Party leader Kemi Badenoch accusing the prime minister of “lying to the whole country” about his knowledge of the then US ambassador’s relationship with the paedophile.

Allegations about Lord Mandelson began to emerge in the newspapers on Tuesday, while more serious allegations – that the Labour peer had suggested Epstein’s first conviction for sexual offences was wrongful and should be challenged – were sent to the Foreign Office on the same day by Bloomberg, which was seeking a response from the government.

But the following day, Sir Keir went into the House of Commons and publicly backed Britain’s man in Washington, giving him his full confidence. Only the next morning – on Thursday – did the PM then sack Lord Mandelson, a decision Downing Street has insisted was made based on “new information”.

Read more:
Witch-hunt vibe in Labour on who approved appointment
Senior Labour MP demands answers over Mandelson vetting

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Vetting ‘is very thorough’

Speaking to Sunday Morning with Trevor Phillips, Mr Kyle said: “Number 10 had what was publicly available on Tuesday, which was extracts of emails which were not in context, and they weren’t the full email.

“Immediately upon having being alerted to extracts of emails, the Foreign Office contacted Peter Mandelson and asked for his account of the emails and asked for them to be put into context and for his response. That response did not come before PMQs [on Wednesday].

“Then after PMQs, the full emails were released by Bloomberg in the evening.

“By the first thing the next morning when the prime minister had time to read the emails in full, having had them in full and reading them almost immediately of having them – Peter was withdrawn as ambassador.”

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Government deeming Mandelson to be ‘worth the risk’ is unlikely to calm Labour MPs

The Conservatives have claimed Sir Keir is lying about what he knew, with Laura Trott telling Sky News there are “grave questions about the prime minister’s judgement”.

The shadow education secretary called for “transparency”, and told Sunday Morning with Trevor Phillips: “We need to understand what was known and when.”

Laura Trott says there are 'grave questions about the prime minister's judgement'
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Laura Trott says there are ‘grave questions about the prime minister’s judgement’

They believe that Sir Keir was in possession of the full emails on Tuesday, because the Foreign Office passed these to Number 10. This is despite the PM backing Mandelson the following day.

Ms Trott explained: “We are calling for transparency because, if what we have outlined is correct, then the prime minister did lie and that is an extremely, extremely serious thing to have happened.”

She added: “This was a prime minister who stood on the steps of Downing Street and said that he was going to restore political integrity and look where we are now. We’ve had two senior resignations in the space of the number of weeks.

“The prime minister’s authority is completely shot.”

But Ms Trott refused to be drawn on whether she thinks Sir Keir should resign, only stating that he is “a rudderless, a weak prime minister whose authority is shot at a time we can least afford it as a country”.

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‘Minority’ who attacked police at ‘Unite the Kingdom’ rally ‘will pay a price’, minister says as up to 150,000 people march in London

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'Minority' who attacked police at 'Unite the Kingdom' rally 'will pay a price', minister says as up to 150,000 people march in London

People who attacked and injured police officers at a march organised by far-right activist Tommy Robinson “should and will pay a price” for their violence, the business secretary has said.

Peter Kyle condemned the bad behaviour at the “Unite the Kingdom” event in London on Saturday, which saw up to 150,000 take part in the rally.

Appearing on Sunday Morning With Trevor Phillips, Mr Kyle said the number of people who turned up showed that free speech is “alive and well” in the UK.

He said: “It doesn’t disturb me, because it’s actually proof that we live in a country where free speech, free association, is alive and well.

“The bit that disturbs me is that when a minority go to an extreme and end up perpetrating violence against the police – that is unacceptable and those people should and will pay a price for it.”

Home Secretary Shabana Mahmood vowed that anyone found to have taken part in criminal activity would “face the full force of the law” – as police said at least 25 people were arrested and 26 officers were injured – including four who were seriously hurt.

Prime Minister Sir Keir Starmer posted on X: “People have a right to peaceful protest. It is core to our country’s values.

More on Metropolitan Police

“But we will not stand for assaults on police officers doing their job or for people feeling intimidated on our streets because of their background or the colour of their skin.

“Britain is a nation proudly built on tolerance, diversity and respect. Our flag represents our diverse country and we will never surrender it to those that use it as a symbol of violence, fear and division.”

Protesters forming the rally gathered in the centre of the capital, holding Union and St George’s flags.

Mr Kyle said: “The flag was waved quite a lot and I do want to make the point that the flag belongs to all of us.

“That flag means a lot of different things to a lot of people, but it is about essential British and English values and principles.

“Those English values and principles include free speech, freedom of association and the like, and all of those things are demonstrated just by the fact that that protest went along and that demonstration went along completely freely, it shows that those values are actually alive and well.”

Activists fly flags and carry wooden crosses during the 'Unite the Kingdom' march in London. Pic: Reuters
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Activists fly flags and carry wooden crosses during the ‘Unite the Kingdom’ march in London. Pic: Reuters

Protesters heard a series of speeches, including from Robinson, who called it the “biggest freedom of speech” in British history.

Police estimated that between 110,000 to 150,000 attended the event.

An anti-racism counter-protest, attended by about 5,000 campaigners, also took place, with the two groups clashing on Whitehall and Trafalgar Square, separated by lines of police.

The Metropolitan Police‘s Assistant Commissioner Matt Twist said officers faced “significant aggression” from “Unite the Kingdom” attendees.

“The violence they faced was wholly unacceptable,” he said.

“Twenty-six officers were injured, including four seriously – among them broken teeth, a possible broken nose, a concussion, a prolapsed disc and a head injury.”

People have been arrested for a range of offences, including affray, violent disorder, assaults, and criminal damage.

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Protesters clash with police

Police said the Robinson crowd was too big to fit into Whitehall and a confrontation happened when police tried to stop them from encircling counter-protesters and accessing the area from different routes.

A Met spokesman said: “When officers moved in to stop them, they faced unacceptable violence. They were assaulted with kicks and punches. Bottles, flares and other projectiles were thrown.”

Officers continued to face aggression in multiple locations, in particular at the north of Whitehall as they worked to create a safe exit route for those who had been taking part in the Stand Up To Racism protest.

Robinson supporters hurled projectiles at counter-demonstrators as both groups faced off on Whitehall, police said.

A row of police horses stood opposite a crowd waving Union flags, and at one point, a glass bottle seemed to strike one of the horses, causing both the animal and its rider to stumble backward.

'Unite the Kingdom' protesters in Trafalgar Square. Pic: Reuters
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‘Unite the Kingdom’ protesters in Trafalgar Square. Pic: Reuters

Protesters in Whitehall. Pic: Reuters
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Protesters in Whitehall. Pic: Reuters

Activists take part in the March Against Fascism, organised by Stand Up To Racism. Pic: PA
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Activists take part in the March Against Fascism, organised by Stand Up To Racism. Pic: PA

Musk makes surprise appearance

Robinson live-streamed the rally on X, with its audience peaking at 2.9 million viewers on Saturday afternoon.

Making a surprise appearance via video link, tech billionaire Elon Musk called for a “change of government” in the UK.

“You can’t – we don’t have another four years, or whenever the next election is, it’s too long,” Musk told the crowd. “Something’s got to be done. There’s got to be a dissolution of parliament and a new vote held.”

TV presenter Katie Hopkins also spoke after earlier appearing alongside Robinson, Lawrence Fox and Ant Middleton at the front of the march.

Katie Hopkins and Tommy Robinson at the rally. Pic: PA
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Katie Hopkins and Tommy Robinson at the rally. Pic: PA

‘Revolution has started – you can’t stop it’

With a voice which sounded hoarse from shouting, Robinson told crowds during his speech that “millions” had showed up for the rally.

“The dam has well and truly burst,” he said. “The cat is out of the bag and there is no putting it back in. The silent majority will be silent no longer.”

Addressing the prime minister and the Labour government, Robinson said: “The revolution has started – and you can’t stop it.”

Referring to a Court of Appeal decision to overturn an injunction blocking asylum seekers being housed at The Bell Hotel in Epping, Essex, Robinson claimed UK courts found the rights of undocumented migrants supersede those of the “local community”.

He said: “They told the world that Somalians, Afghanis, Pakistanis, all of them, their rights supersede yours – the British public, the people that built this nation.”

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First migrants to be sent back to France next week under returns deal

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First migrants to be sent back to France next week under returns deal

The Home Office will return migrants to France for the first time next week under the terms of a new deal, Sky News understands.

The agreement, which was signed in July, saw migrants first detained on 6 August, and they will now be flown back to the continent.

The ‘one in, one out’ deal means the UK can send people back to France if they have entered the country illegally. In exchange, the UK will allow asylum seekers to enter through a safe and legal route – as long as they have not previously tried to enter illegally.

It is a pilot scheme for now, which will be in place until June 2026.

Read more: How UK-France migrant returns deal works

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UK-France migrant returns deal explained

Politics Hub – latest updates

The scheme comes amid growing public anger over immigration, with the issue recently becoming voters’ top concern for the first time since Brexit.

More on Migrant Crossings

On Saturday, up to 150,000 people marched in London, gathering around Westminster in a protest dubbed ‘Unite the Kingdom’, and organised by far-right activist Tommy Robinson. There were a number of clashes with police, leading to 25 arrests and 26 police officers being injured.

Laura Trott, the shadow education secretary, said the “horrendous incidents” of violence were “completely abhorrent”, and said she was glad to hear those involved will feel the force of the law.

But speaking on Sunday Morning with Trevor Phillips, she warned that the protest shows that people feel “let down” by the government on immigration.

Ms Trott told Sky News: “There is clearly an issue in this country at the moment about immigration and migration. People clearly feel let down by a government that came in and said they were going to ‘smash the gangs’. And what we’ve seen is an increase in migration.

“We are not seeing the action from this government, which is distracted by scandal after scandal.”

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Public feel ‘let down’ on immigration

She also accused Sir Keir Starmer of being a “rudderless prime minister”.

Business Secretary Peter Kyle said that violence against police is “unacceptable” but said it is “proof that we live in a country where free speech, free association is alive and well”.

On immigration, he insisted that the government is “straining at the bit to get a grip on the migration crisis”, which Mr Kyle said Labour “inherited from the Conservatives”.

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‘Free speech is alive and well’

“We’ve been doing everything we can,” he said.

“The lesson is that by cooperating with our partners, France, rather than rowing with them, we are able to deliver.

“So I hope the flights will start as quickly as possible.”

But he said he was unaware of the exact date.

Mr Kyle added that ministers were “also angry about what we’ve inherited” and that they were doing “everything possible to get a grip on it”.

The number of migrants arriving in the UK after crossing the English Channel has topped 30,000 for the year so far.

It is the earliest point in a calendar year at which the 30,000 mark has been passed since data on the crossings was first reported in 2018.

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