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.
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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.
A British grandmother has died after contracting rabies from a “slight scratch” from a puppy during a holiday in Morocco, her family has said.
Yvonne Ford’s daughter said she travelled to the North African country in February but did not become ill until two weeks ago.
Robyn Thomson said in a Facebook post: “Our family is still processing this unimaginable loss, but we are choosing to speak up in the hope of preventing this from happening to others.
“She was scratched very slightly by a puppy in Morocco in February. At the time, she did not think any harm would come of it and didn’t think much of it.
“Two weeks ago she became ill, starting with a headache and resulted in her losing her ability to walk, talk, sleep, swallow. Resulting in her passing.”
Yvonne Ford went to Morocco in February, her family said. Pic: Facebook
Ms Ford, from Barnsley, South Yorkshire, was diagnosed with the virus at Barnsley Hospital.
The UK Health Security Agency (UKHSA) said health workers and close contacts were being assessed and offered vaccination when necessary.
It said there was no risk to the wider public because there is no evidence rabies can be transmitted between people.
What is rabies and how is it treated?
Rabies is caused by a virus invading the central nervous system.
It is spread by mammals – such as cats, dogs, bats, raccoons and foxes – but in the UK it’s only found in some bats, according to the NHS.
Once symptoms appear, it is almost always fatal, according to the World Health Organisation (WHO).
The first symptoms can mirror a flu, while later symptoms include numbness or tingling in the affected area, hallucinations, anxiety, difficulty swallowing or breathing, nausea, vomiting, agitation, excessive saliva and paralysis.
But if seen to promptly after a bite, scratch or lick by an animal that may carry the virus, treatment is usually very effective at preventing the condition.
Treatment usually involves two or more doses of the rabies vaccine or a medicine called rabies immunoglobulin, which is a liquid administered to the wound and is only required if the patient has not had the rabies vaccine or has a weakened immune system.
The rabies vaccine is recommended if you’re travelling to a part of the world where rabies is more common.
Around 60,000 people die every year from rabies worldwide, with the majority in Africa and Asia, according to the WHO.
Read more about rabies, and how to avoid getting it, here.
Dr Katherine Russell at the UKHSA said: “I would like to extend my condolences to this individual’s family at this time.
“If you are bitten, scratched or licked by an animal in a country where rabies is found then you should wash the wound or site of exposure with plenty of soap and water and seek medical advice without delay in order to get post-exposure treatment to prevent rabies.”
The UKHSA urges travellers to rabies-affected countries, for example in Asia and Africa, to avoid contact with dogs, cats and other animals wherever possible and check whether a vaccination is needed before travelling.
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There have been six cases of human rabies associated with animal exposure abroad that have been reported in the UK between 2000 and 2024.
This includes a case in 2012, when a UK resident died after being bitten by a dog – the most common source of infection in most parts of the world – in South Asia.
The latest case was in 2018, when another Briton died after being bitten by a cat in Morocco.
Latest World Health Organisation figures show a number of deaths from rabies in Morocco have been reported every year from 2010 to 2022.
Rabies does not circulate in either wild or domestic animals in the UK, although some species of bats can carry a rabies-like virus. No human cases of rabies acquired in the UK from animals other than bats have been reported since 1902.
The grieving mother of a Scottish teenager who vanished for almost five weeks has told Sky News she believes a “third party” was involved in her son’s death – but police say there’s “no evidence” of that.
Cole Cooper, 19, was discovered dead in woods near Falkirk earlier this month following a missing persons inquiry his relatives don’t believe was taken seriously enough by police.
He was last seen on CCTV in May after leaving a house party, but police later revealed a former school friend had spoken to Cole a few days later nearby.
Speaking exclusively to Sky News, his mother Wendy Stewart, 42, revealed her son had “various arguments” in the days and hours before he disappeared.
Cole’s mum Wendy (L) and his aunt Aimee
In an emotional interview, she said: “He was only 19, he should never have been taken. I am never going to see him again. I never got a chance to give him a last cuddle and hold his hand.
“Someone has taken that away from me far too soon. Whether it be intentionally or unintentionally, I do believe there has been some involvement by a third party and the result is the death of Cole.”
The family, who organised a local vigil in Cole’s memory last weekend, have vowed to get “justice”.
Asked what that means, Ms Stewart told Sky News: “Finding the culprit and getting justice that way. Finding the person that is responsible for the death of my child.”
Police previously said 400 residents were spoken to during door-to-door enquiries and more than 2,000 hours of CCTV footage was collected.
The 19-year-old’s death is being treated as “unexplained”, with a top police officer saying “at this time there is no evidence of any third party involvement”.
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A vigil was held in Banknock for Cole Cooper. Pic: PA
Cole’s aunt Aimee Tennie, 32, revealed the family’s anger over the police handling of the case as they attempt to find out what happened.
She said: “We are aware of small details surrounding the weekend leading up to it with arguments. He had a few arguments over that weekend. We want the details re-examined thoroughly.”
Sky News put all of the family’s concerns and allegations to Police Scotland.
The force initially swerved our questions and responded saying: “Enquiries remain ongoing.”
In an update later on Wednesday morning, Detective Chief Inspector Bob Williamson said: “We are carrying out significant enquiries into Cole’s death, however, at this time there is no evidence of any third party involvement.
“It is vital that we establish the full circumstances leading up to Cole’s death so that we can provide some answers to his family.
“The thoughts of everyone involved in this investigation are very much with his family and friends and officers will continue to offer them support and keep them informed as our enquiries progress.”
Ms Stewart claimed the probe has been handled “shockingly” with a failure to take her son’s disappearance seriously.
The 42-year-old said: “I have had to scream and shout from rooftops to be heard by the police. I don’t think they have handled it well.
“The police really need to take accountability and listen to families, they are reporting a missing child and understand the family knows their child best.”
Cole’s loved ones still have not been told when his body will be released to allow them to lay him to rest.
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