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).
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
Related Topics:
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.
Please use Chrome browser for a more accessible video player
7:26
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.
Image: 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.
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.
Please use Chrome browser for a more accessible video player
3:06
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.
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 have made 200 arrests in London after crowds turned out for a Palestine Action demonstration – despite the group being banned.
Organisers Defend Our Juries 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.
The Metropolitan Police said a “significant number of people” were seen “displaying placards expressing support for Palestine Action, which is a proscribed group”.
“We have now made 200 arrests in Parliament Square this afternoon,” the force wrote in a post on X.
In an earlier post, it wrote: “While many of those remaining in the square are media and onlookers, there are still people holding placards supporting Palestine Action. Officers are steadily working through the crowd making further arrests.”
Image: An aerial view of Parliament Square
Image: Protesters write on placards for the Lift the Ban campaign rally on Saturday. Pic: PA
Legislation to proscribe 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 announced the protest would go ahead earlier this week despite the ban, following several other similar demonstrations since the proscription last month.
On Saturday, a spokesperson for the group said that “Palestine Action and people holding cardboard signs present no danger to the public at large”.
Image: A woman is dragged away by police officers after attending the Palestine Action protest in Parliament Square. Pic: PA
Three people have been charged as a result of illegal Palestine Action activity.
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.
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 the Palestine Action.
Image: A man is detained by police officers in Parliament Square. Pic: PA
Crowds had assembled in Parliament Square by 1pm, with people seen writing “I oppose genocide, I support Palestine Action” on placards.
Many remained silent while others sang pro-Palestine chants.
A Home Office spokesperson said in a previous statement: “The Home Secretary has been clear that the proscription of Palestine Action is not about Palestine, nor does it affect the freedom to protest on Palestinian rights.
“It only applies to the specific and narrow organisation whose activities do not reflect or represent the thousands of people across the country who continue to exercise their fundamental rights to protest on different issues.”
The ban faces a legal challenge in November after the High Court granted a full judicial review to Palestine Action co-founder Huda Ammori.
The Department for Work and Pensions will launch an independent review into its handling of prosecutions against Post Office staff, Sky News has learned.
About 100 prosecutions were carried out by the DWP between 2001 and 2006 during the Horizon IT scandal.
The “independent assurance review”, however, is yet to be commissioned and will not look at individual cases.
Hundreds of subpostmasters were wrongfully convicted of stealing by the Post Office between 1999 and 2015, due to the faulty Horizon IT system.
Please use Chrome browser for a more accessible video player
2:55
What did we learn from the Post Office inquiry?
The DWP told Sky News they have “committed” to commissioning the review into prosecutions led by the department, where Post Office staff were investigated for “welfare-related fraud”.
They described cases as “complex investigations” which they said were “backed by evidence including filmed surveillance, stolen benefit books and witness statements”.
More from UK
They also added that “to date no documentation has been identified showing that Horizon data was essential to these prosecutions”.
The review will look at a period of time spanning 20 years covered by the Post Office (Horizon System) Offences Act 2024, from September 1996 to December 2018.
The Horizon Act was effectively blanket exoneration legislation which automatically quashed Post Office convictions but did not include DWP or Capture-related prosecutions.
Image: Roger Allen
The family of Roger Allen, who was convicted in 2004 of stealing pension payments by the DWP and sentenced to six months in prison, are “frustrated” the review won’t look at his or other cases.
Mr Allen died in March last year, still trying to clear his name.
Keren Simpson, his daughter, describes the review as a “development” but a “fob off”.
“I think it’s just getting us off their backs,” she said, “I’ll believe it when I see it because they’re not taking any accountability.
“They’re not acknowledging anything. They’re denying everything.
“No one’s saying, look, we really need to dig in and have a look at all these cases to see if there’s the same pattern here.”
Please use Chrome browser for a more accessible video player
1:29
‘Everyday life was a struggle’ – former sub-postmistress
Mr Allen pleaded guilty to spare his wife – after his lawyer told him in a letter that there had been “an indication from the Crown that they may discontinue the proceedings against Mrs Allen were you minded to plead guilty”.
Despite the Criminal Cases Review Commission deciding Mr Allen had grounds to appeal against his conviction, it was upheld by the Court of Appeal in 2021.
The independent review will look at the “methodology and processes” used by the DWP, and the “thoroughness and adequacy” of efforts to obtain case documents.
The DWP say that the review won’t be commenting on individual cases or those that have been dismissed by the Court of Appeal.
Please use Chrome browser for a more accessible video player
11:28
Post Office: The lost ‘Capture’ files
Potential reviewers will also be approached with experience “outside of the civil service”.
They will be asked to produce a report with recommendations for any further actions within six months of starting their review.
Lawyer Neil Hudgell, instructed by some of those prosecuted, described the review as “wholly inadequate”, saying the DWP “should not be marking its own homework.”
“Any involvement in the process of appointing reviewers undermines all confidence in the independence of the process,” he added.
Please use Chrome browser for a more accessible video player
2:48
‘All we want is her name cleared’
He also criticised the DWP’s statement as “strikingly defensive and closed minded”.
“It cannot be anything approaching rigorous or robust without a proper case by case review of all affected cases, including those dismissed by the Court of Appeal.”
He said that where hundreds of convictions were quashed “at the stroke of a pen” a proper and “targeted” review is “the least these poor victims are owed.”
“At the moment there is a widespread feeling among the group that they have been “left behind and that is both legally and morally wrong.”
A Freedom of Information request to the Department of Work and Pensions by Sky News has also found that most cases they prosecuted involved encashment of stolen benefit payment order books.
In response to questions over how many prosecutions involved guilty pleas with no trial, the DWP said the information had been destroyed “in accordance with departmental records management practices” and in line with data protection.
A 15-year-old boy has been found guilty of the murder of Sheffield schoolboy Harvey Willgoose.
Harvey, also 15, was killed by a fellow student outside their school cafeteria in February this year.
His parents, Mark and Caroline Willgoose, have told Sky News that school knife crime is “a way of life for kids”.
The defendant, who cannot be named for legal reasons, had brought a 13cm hunting knife with him into All Saints Catholic High School, Sheffield, stabbing Harvey twice in the chest just a few minutes into the lunch break.
His defence told the court the defendant had “lost control”, stabbing Harvey after years of bullying and “an intense period of fear at school”.
Moments after stabbing Harvey, he told teachers, “you know I can’t control it” and “I’m not right in the head”.
Giving evidence, the boy told the court he had no recollection of the moment he killed Harvey, something the prosecution said was “a lie”.
They told the jury the schoolboy “wanted to show he was hard” and had become “obsessed” with weapons in the lead up to Harvey’s death, with photographs of him posing with knives found on his phone.
Chris Hartley, of the Crown Prosecution Service, expressed the organisation’s “huge sympathies” for Harvey’s family and friends.
“The CPS and South Yorkshire Police were able to prove that the defendant did not lose self-control but intended to deliberately attack 15-year-old Harvey,” he said in a statement after the verdict.
“We remind teenagers that there can be horrendous and serious consequences of carrying knives. It has been proven that if you carry these weapons, you are more likely to use them or be a victim of knife crime. You are putting yourself, other people and your future at risk. Please stop carrying knives and stop putting lives in danger.”
Image: Harvey Willgoose and his mother
Speaking to Sky News ahead of today’s verdict, Harvey’s mother, Caroline Willgoose, said she felt she had “led [her son] into the lion’s den”.
She said Harvey was a “school avoider” who had “anxiety” about going to school.
“We badgered Harvey into going to school but I don’t think people realise that there is a problem in all schools with knives,” says Mrs Willgoose.
“It’s a way of life now for kids, and it needs to stop.”
During the trial, it was revealed that the defendant had had previous violent outbursts at school, and, a few months before Harvey was stabbed, the school had called the police when the defendant’s mother contacted them to say she had found a weapon in her son’s bag at home.
Harvey’s parents told Sky News’ Katerina Vittozzi they feel that the school did not take previous knife-related incidents “seriously enough” and felt “100%” the outcome might have been different if they had.
The head of St Clare Catholic Multi Academy Trust – a group of schools including All Saints – also told Sky News Harvey’s death “was an unimaginable tragedy for all”.
Steve Davies said: “We think especially of Harvey’s family, loved ones and friends today. We cannot begin to imagine the immeasurable impact the loss of Harvey has had on them.
“Harvey was a much-loved, positive and outgoing pupil whose memory will be cherished by all who knew him. As a community, we have been devastated by his death, and we continue to think of him every day.”
He added: “Harvey’s death was an unimaginable tragedy for all, and one that understandably gives rise to a number of questions from his family and others.
“Now that the trial has finished, a number of investigations aimed at addressing and answering these questions will be able to proceed.
“We will engage fully and openly with them to help ensure every angle is considered and no key questions are left unresolved.”
Describing her son as “a character” who “never stopped smiling, never stopped singing”, Mrs Willgoose said she was now campaigning for “all schools and colleges” to use knife arches.
“I want people to go into schools and talk about the devastation of what knife crime does.”
In an emotional interview with Sky News’ Katerina Vittozzi, Mrs Willgoose said she felt her son was “put here for a reason” and “I can’t let go until I put things right for him”.
“There’s no winners when it comes to knife crime,” she said.
The defendant “has ruined his life, his parent have got an empty bed”, she added. “He’s got to live with this for the rest of his life.”
Harvey’s father, Mark Willgoose, said that his son had had “a short life, but a good life”.
“He crammed everything in, and you’ve just got to try and see the positives in that,” Mr Willgoose added.
“Whatever happens in court, it’ll never be justice. It’ll never be enough.
“I think we’ve just got to make sure Harvey’s death is not going to be in vain, and if whatever we do saves one life, then it’s been worth us doing it.”
This breaking news story is being updated and more details will be published shortly.