Spring statement 2025 key takeaways
Rachel Reeves has delivered her much anticipated spring statement today.
The chancellor’s statement is not a formal budget – as Labour pledged to only deliver one per year – but rather an update on the economy since her fiscal statement last October.
Ms Reeves told MPs “the world has changed” since her first budget just under five months ago, and that was to blame for the string of cuts and downgrades she outlined in the Commons.
Politics latest: Follow live updates
But critics have said today’s update is a direct consequence of her decisions since taking office in July.
Here are the key takeaways from the spring statement:
The Office for Budget Responsibility (OBR) has halved the UK growth forecast for 2025 from 2% to 1%, Ms Reeves said, adding that she was “not satisfied with these numbers”.
She explained that the government’s budget will move from a deficit of £36.1bn in 2025-26 and £13.4bn in 2026-27, to a surplus of £6bn in 2027-28, £7.1bn in 2028-29 and £9.9bn in 2029-30.
While the short-term growth forecasts appear gloomy, the chancellor said the OBR predicts the economy will be “larger” by the end of the forecast compared with the time of her first budget as a result of her decisions.
The OBR expects output to grow 1% in 2025, by 1.9% next year, 1.8% in 2027, 1.7% in 2028 and by 1.8% in 2029.
On living standards, real household disposable income per person is expected to grow by an average of around 0.5 percentage points a year from 2025-26 to 2029-30, led by stronger wage growth and inflation starting to fall later in the forecast period.
Ms Reeves said disposable income will “grow this year at almost twice the rate expected in the autumn”, adding: “Households will be on average over £500 a year better off under this government.”
The chancellor announced further welfare cuts after being told the reforms announced last week will save less than planned – £3.4bn instead of £5bn.
Among the latest changes to welfare spending, Ms Reeves said the universal credit health element would be cut by 50% and frozen for new claimants rather than rising in line with inflation.
However, the universal credit standard allowance will increase from £92 per week in 2025-26 to £106 per week by 2029-30. The changes will mean a further 150,000 people will not receive carer’s allowance or the carer element of universal credit, according to the government’s own impact assessment.
Please use Chrome browser for a more accessible video player
Ed Conway examines chancellor’s numbers
The OBR has estimated the new welfare savings package will save £4.8bn.
Cuts to welfare will mean 250,000 more people – including 50,000 children – will be pushed into poverty by 2030, the government’s assessment predicts.
Separately, 800,000 people will not receive the daily living component personal independence payment (Pip) – due to tightening eligibility rules.
The chancellor pledged to “boost Britain’s defence industry and to make the UK a defence industrial superpower”.
She confirmed the government’s pledge to spend 2.5% of GDP by 2027.
The Ministry of Defence will get an additional £2.2bn next year, the chancellor said, which will be spent on new high-tech weaponry, upgrading HM Naval Base in Portsmouth, and refurbishing military family homes, among other things.
The commitment is fully funded, with cash coming from Treasury reserves and also from the decision to slash foreign aid funding.
Ms Reeves said the statement does not contain any further tax increases, but highlighted work that needs to be done to tackle tax evasion.
She announced steps to crack down on it, saying the government will increase the number of tax fraudsters charged each year by 20%.
She said reducing tax evasion will raise an extra £1bn for the economy.
On departmental budgets – which dictate how much different parts of government can spend until 2030 – Ms Reeves said she aims to make the state “leaner and more agile”.
The chancellor also confirmed that a voluntary redundancy scheme is set to launch for civil servants, saying this will deliver £3.5bn in “day-to-day savings by 2029-30”.
Government spending will now grow by an average of 1.2% a year above inflation, compared with 1.3% in the autumn.
Planning reforms will see house building reach a more than 40-year high by 2030, the chancellor said.
She said the OBR has forecast that the government’s reforms will boost house building by 170,000 over the next five years, to 305,000.
This would put the government on track to add around 1.3 million to Britain’s stock of homes in the UK, a rise of 16%, by the end of parliament.
However, reforms will only increase the overall housing stock by 0.5% by the end of 2030, falling short of the government’s initial pledge to build 1.5 million houses.
How have the markets reacted?
The reaction of financial markets to a fiscal event is important, particularly as a poorly received speech can add to government borrowing costs on the bond markets.
The good news for the chancellor here is that yields – the premium demanded by investors to hold UK government debt – dipped slightly in the wake of her remarks.
Read more:
Beth Rigby analysis: Starmer has moved on to Tory territory
Ed Conway takes us through economic numbers
The yield for UK 30-year bonds, known as gilts, eased by almost 0.1 percentage points to 5.283%.
Similar, but smaller, declines were seen for their 10 and two-year counterparts.
The only other market reaction to speak of was a dip in the value of the pound, which lost three tenths of a cent against the dollar and the euro.
A major incident has been declared in Birmingham over an ongoing bin strike, which has left around 17,000 tonnes of waste on the streets of the city.
Birmingham City Council said the “regrettable” step was taken in response to public health concerns, with picket lines blocking depots and preventing waste vehicles from collecting rubbish.
Members of Unite have been on all-out strike since 11 March in a row over pay, which the union claims will leave some members of staff £8,000 worse off. A series of walkouts have also impacted refuse collections since January.
Politics latest: Follow live updates
By declaring a major incident, the council will be able to increase the availability of street cleansing and fly-tip removal with an additional 35 vehicles and crews around the city.
This action will also allow the council to explore what further support is available from neighbouring authorities and the government to assist in the management of the situation.
Council leader John Cotton said it was a “regrettable” step, but the situation was “causing harm and distress” to local people.
Please use Chrome browser for a more accessible video player
Birmingham suffers bin crisis
“I respect the right to strike and protest, however actions on the picket line must be lawful and sadly the behaviour of some now means we are seeing a significant impact on residents and the city’s environment,” he said.
Jim McMahon, the minister for local government, said the all-out strike by Unite members is causing “misery and disruption” to residents, as well as posing a “public health risk to the city’s most vulnerable and deprived”.
He said the government “stands ready” to respond to any request for extra resources, but insisted that any deal to end the bin strike must “maintain value for money”.
Please use Chrome browser for a more accessible video player
‘They can’t hold the city to ransom’
Mr McMahon told the Commons: “This is causing a public health risk to the city’s most vulnerable and deprived residents. As a result, I am aware that Birmingham has today declared a major incident to give them the mechanisms to better manage the impact on local residents.
“I support that decision, and I will back local leaders.”
The minister added that the government will “not hesitate to give support in any way that Birmingham leaders need”.
He said: “If local leaders on the ground in Birmingham feel that tackling these issues goes beyond the resources available to them and they request national support, then of course we stand ready to respond to any such request.”
Members of the Unite union met with Birmingham City Council last Thursday, but talks have so far failed.
Unite says the dispute will not end unless the “hugely damaging” cuts to bin collectors’ wages are reversed.
But Birmingham City Council says the aim of the restructuring is to create a “modern, sustainable and consistently reliable waste collection service”.
Controversial sentencing guidelines that were due to come into force on Tuesday have been delayed after a political backlash.
The Sentencing Council, the independent body that sets out sentencing guidance to courts in England and Wales, was due to bring in new rules around how judges should determine punishment for people from ethnic minority backgrounds.
The new guidance states that a pre-sentence report – the results of which are taken into account when considering a criminal’s sentence – will “usually be necessary” before handing out punishment for someone from an ethnic, cultural or faith minority, alongside other groups such as young adults aged 18 to 25, women and pregnant women.
Politics latest: Follow live updates
Shabana Mahmood, the justice secretary, had said the proposed guidance was “unacceptable” and amounted to “differential treatment before the law” as she urged the council to reverse it.
When the Sentencing Council initially refused her request, Ms Mahmood threatened to legislate to overturn the guidance if necessary.
She confirmed this evening that she would introduce legislation on Tuesday to block these guidelines coming into effect.
Please use Chrome browser for a more accessible video player
Robert Jenrick has hit out at what he says is
The Sentencing Council has now delayed the “in force date of the guideline pending such legislation taking effect”.
It said in a statement that the council “remains of the view that its guideline, imposition of community and custodial sentences, as drafted is necessary and appropriate”.
However, in a meeting between the chairman Lord Justice Davis and Ms Mahmood on Monday, the minister “indicated her intention to introduce legislation imminently that would have the effect of rendering the section on ‘cohorts’ in the guideline unlawful”.
The council said it is unable to introduce a guideline when there is a draft bill due for introduction that would make it unlawful.
Ms Mahmood said: “This differential treatment is unacceptable – equality before the law is the backbone of public confidence in our justice system. I will change the law to ensure fairness for all in our courts.”
The Sentencing Council also attracted criticism from shadow justice secretary Robert Jenrick, who said its updated guidance was an example of “two-tier justice” that would lead to “blatant bias” against Christians and straight white men.
He also argued that it would make “a custodial sentence less likely for those from an ethnic minority, cultural minority, and/or faith minority community” – something the council denied.
The council previously rejected calls from the government to abandon the guidelines, which ask judges to consider offenders’ racial, cultural and religious background when deciding a sentence.
Lord Davis denied that pre-sentence reports reduced the prospect of a jail sentence.
However, he said the council would provide “some clarification of the language” to avoid confusion.
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports12 months agoStory injured on diving stop, exits Red Sox game
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business3 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway