Spring statement: Rachel Reeves can make decisions on spending cuts without too much fallout for now – but worse could be yet to come

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4 days ago

March 25, 2025

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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.

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.

‘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.

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.

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 the hard sell to make from a very hard place, that could soon become even tougher still.

Politics

Bitcoin adoption in EU limited by ‘fragmented’ regulations — Analysts

Published

1 hour ago

March 29, 2025

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Bitcoin adoption in EU limited by ‘fragmented’ regulations — Analysts

Institutional adoption of Bitcoin in the European Union remains sluggish, even as the United States moves forward with landmark cryptocurrency regulations that seek to establish BTC as a national reserve asset.

More than three weeks after President Donald Trump’s March 7 executive order outlined plans to use cryptocurrency seized in criminal cases to create a federal Bitcoin (BTC) reserve, European companies have largely remained silent on the issue.

The stagnation may stem from Europe’s complex regulatory regime, according to Elisenda Fabrega, general counsel at Brickken, a European real-world asset (RWA) tokenization platform.

“European corporate adoption remains limited,” Fabrega told Cointelegraph, adding:

“This hesitation reflects a deeper structural divide, rooted in regulation, institutional signaling and market maturity. Europe has yet to take a definitive stance on Bitcoin as a reserve asset.”

Bitcoin’s economic model favors early adopters, which may pressure more investment firms to consider gaining exposure to BTC. The asset has outperformed most major global assets since Trump’s election despite a recent correction.

Despite Trump’s executive order, only a small number of European companies have publicly disclosed Bitcoin holdings or crypto services. These include French banking giant BNP Paribas, Swiss firm 21Shares AG, VanEck Europe, Malta-based Jacobi Asset Management and Austrian fintech firm Bitpanda.

A recent Bitpanda survey suggests that European financial institutions may be underestimating crypto investor demand by as much as 30%.

Europe’s “fragmented” regulatory landscape lacks clarity

The EU’s slower adoption appears tied to its patchwork of regulations and more conservative investment mandates, analysts at Bitfinex told Cointelegraph. “Europe’s institutional landscape is more fragmented, with regulatory hurdles and conservative investment mandates limiting Bitcoin allocations.”

“Additionally, European pension funds and large asset managers have been slower to adopt Bitcoin exposure due to unclear guidelines and risk aversion,” they added.

Beyond the fragmented regulations, European retail investor appetite and retail participation are generally lower than in the US, according to Iliya Kalchev, dispatch analyst at digital asset investment platform Nexo.

Europe is “generally more conservative in adopting new financial instruments,” the analyst told Cointelegraph, adding:

“This stands in stark contrast to the deep, liquid, and relatively unified US capital market, where the spot Bitcoin ETF rollout was buoyed by strong retail demand and a clear regulatory green light.”

BlackRock, the world’s largest asset manager, launched a Bitcoin exchange-traded product (ETP) in Europe on March 25, a development that may boost institutional confidence among European investors.

Magazine: Bitcoiner sex trap extortion? BTS firm’s blockchain disaster: Asia Express

Politics

NAYG lawsuit against Galaxy was ‘lawfare, pure and simple’ — Scaramucci

Published

6 hours ago

March 29, 2025

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<div>NAYG lawsuit against Galaxy was ‘lawfare, pure and simple' — Scaramucci</div>

The New York State Attorney General’s (NAYG) recent legal action against Galaxy Digital over its promotional ties to the now-collapsed cryptocurrency Terra (LUNA) was unfair and an abuse of the legal system, says SkyBridge Capital and founder Anthony Scaramucci.

“It’s LAWFARE, pure and simple due to an obscure but dangerously powerful New York law known as the Martin Act,” Scaramucci said in a March 28 X post.

Martin Law can “open the door for abuse”

“The law has no need to prove intent, creating a low standard of proof that can open the door for abuse like this. It shouldn’t exist,” he said.

New York’s Martin Act is one of the US’s strictest anti-fraud and securities laws, allowing prosecutors the power to pursue financial fraud cases without needing to prove intent. The NAYG alleged that Galaxy Digital violated the Martin Act over its alleged promotion of Terra, with Galaxy Digital agreeing to a $200 million settlement.

According to NAYG documents filed on March 24, Galaxy Digital acquired 18.5 million LUNA tokens at a 30% discount in October 2020, then promoted them before selling them without abiding by disclosure rules.

Scaramucci reiterated that Galaxy CEO Michael Novogratz was under the impression everything he was saying about Luna was true, as he had been deceived by Terraform Labs and its former CEO, Do Kwon.

Law, New York, United States, Terra — *Source:* *Amanda Fischer*

Meanwhile, MoonPay president of enterprise, Keith Grossman, said he had never heard of the Martin Act and had to look it up using AI chatbot ChatGPT.

“It is so broad and essentially is the essence of lawfare,” Grossman said. “Sorry you got caught in the crosshairs of it, Mike,” he added.

The filing alleged that Galaxy helped a “little-known” token, referring to LUNA, increase its market price from $0.31 in October 2020 to $119.18 in April 2022 while “profiting in the hundreds of millions of dollars.”

Asset manager and investor Anthony Pompliano said he isn’t familiar with the details of the lawsuit but vouched for Novogratz, calling him a “good man” who has devoted a lot of time and money to helping others.

The Terra collapse is one of the crypto industry’s most infamous failures. In March 2024, SEC attorney Devon Staren said in the US District Court for the Southern District of New York that Terra was a “house of cards” that collapsed for investors in 2022.

Magazine: Arbitrum co-founder skeptical of move to based and native rollups: Steven Goldfeder

Politics

Elon Musk’s sale of X to xAI just made fraud lawsuit a ‘lot spicer’

Published

14 hours ago

March 29, 2025

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Elon Musk’s sale of X to xAI just made fraud lawsuit a ‘lot spicer’

Billionaire investor Elon Musk has sold his social media platform X to his AI startup xAI, sparking controversy as it coincides with a US judge rejecting his bid to dismiss a lawsuit tied to the social media platform.

The transfer of ownership of X to xAI on March 28 means that the class-action lawsuit against Musk — accusing him of defrauding former Twitter shareholders by delaying the disclosure of his initial investment in the social media platform — has become “a whole lot spicer,” Cinneamhain Ventures partner Adam Cochran said in a March 28 X post.

Acquisition may open up xAI to more ‘exposure’

On the same day that Musk said “xAI has acquired X in an all-stock transaction,” a US judge reportedly rejected Musk’s attempt to dismiss the lawsuit. Cochran said it has “opened up his AI entity to exposure here too, and it’s a much bigger pie.”

Musk said the deal values xAI at $80 billion and X at $33 billion, factoring in $12 billion in debt from the $45 billion valuation. He originally bought X, formerly Twitter, for around $44 billion in April 2022.

“xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution and talent,” Musk said.

“This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach,” he said, adding:

“This will allow us to build a platform that doesn’t just reflect the world but actively accelerates human progress.”

However, Cochran claimed that “Musk used his pumped up xAI stock to pay multiple times over value for X, but still take an $11B loss on the transaction.” He said that Musk is “screwing over xAI investors, and X investors” and was executed to sell user data to xAI.

xAI is best known for its AI chatbot “Grok” which is built into the X platform. When Musk released it in November 2023, he claimed it could outperform OpenAI’s first iteration of ChatGPT in several academic tests.

Musk explained at the time that the motivation behind building Grok is to create AI tools equipped to assist humanity by empowering research and innovation.

While Cochran said that Grok being valued at $80 billion is an “insanely dumb valuation,” crypto developer “Keef” disagrees. Keef said, “This is shady all around, but given the day, Grok is genuinely probably the top model for various tasks.”

Magazine: Arbitrum co-founder skeptical of move to based and native rollups: Steven Goldfeder