After chancellor’s spring statement we end more or less where we began

Published

4 months ago

March 26, 2025

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Nothing to see here – nothing has changed. That, at least, was the message the chancellor probably wants us to walk away with today, having consumed her first spring statement.

Consider the “current budget” – in other words the extent to which the government is having to borrow to finance day-to-day spending in the public sector.

This might seem like an arcane datapoint to focus on, but clearly someone in the Treasury is spending a lot of time thinking about it. Indeed, this was the very first statistic Chancellor Rachel Reeves mentioned in her speech today.

And for good reason. Last year Ms Reeves set herself a couple of fiscal rules, the most binding of which came back to the current budget. If she isn’t to fall foul of the rule, she needs to get the current budget into a surplus.

Last time around that surplus was £9.9bn – in other words she met the rule with £9.9bn “headroom”. Actually, to be even more geeky about it, the headroom was £9.93bn.

That raises a question: what was the headroom this time around? Lo and behold it was £9.93bn. Precisely the same number as the one last time around.

In other words, in statistical terms, the chancellor has blitzed the homework assignment she set herself. But now let’s look a little closer.

In fact, that latest £9.93bn figure is a product of some extraordinary fiscal contortions behind the scenes. Because a few weeks ago, when the Office for Budget Responsibility provided the Treasury with their forecasts of the state of the economy and the implications for the public finances, her headroom was not £9.93bn.

On the contrary, the entire headroom had been wiped out. Why? In large part because the economy is growing at a slower rate than previously expected and interest rates are higher. Put those two factors together and that adds up to more debt. It meant all of a sudden her £9.93bn surplus turned into a £4.1bn deficit.

So how, you might ask, did the chancellor turn it back into the number she started with?

Answer, by deploying all sorts of fiscal levers. There are clampdowns on tax avoidance. There’s the redeployment of spending from aid to defence (since defence is mostly capital investment it has the benefit, from her perspective, of shoving a lot of spending into a different column in the governmental spreadsheet).

There’s a host of spending cuts (including reducing annual departmental spending in the years preceding the next election to the same rate Jeremy Hunt was targeting). And then there’s those welfare cuts you read about last week.

I could go on.

The welfare cuts from last week turn out to be far less effective at saving money than the government told everyone last week; the OBR also rapped the Treasury over the fingers for not being transparent enough with its figures. Those cuts will, according to the government’s own documents, push 350,000 or more people into poverty, including 50,000 children.

Beth Rigby analysis: Starmer has moved on to Tory territory

At this point (if you’re still reading), you’re probably asking yourself: why on earth is British economic policy being determined in large part with the objective of helping the chancellor to meet a fiscal rule she set herself and no one much cares about outside of Whitehall? And the truth is, there’s no particularly good answer to that question.

All the same: we end more or less where we began. The rule is met. The economy is weaker in the short run but slightly stronger in the longer run. But economic policy is not the same now as it was yesterday.

UK

Palace confirms dates of Trump’s state visit – as King and Queen to host him at Windsor Castle

Published

5 hours ago

July 14, 2025

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Palace confirms dates of Trump's state visit - as King and Queen to host him at Windsor Castle

The dates for Donald Trump’s state visit to the UK have been announced, with the US president due to be welcomed by the King from 17 to 19 September.

Buckingham Palace also confirmed that President Trump and first lady Melania will be hosted by the King and Queen at Windsor Castle.

It was expected that the three-day state visit would take place in September after Mr Trump let slip earlier in April that he believed that was when his second “fest” was being planned for.

Windsor was also anticipated to be the location after the US president told reporters in the Oval Office that the letter from the King said Windsor would be the setting. Refurbishment works at Buckingham Palace also meant that Windsor was used last week for French President Emmanuel Macron’s visit.

This will be Mr Trump’s second state visit to the UK, an unprecedented gesture towards an American leader, having previously been invited to Buckingham Palace in 2019.

He has also been to Windsor Castle before, in 2018, but despite the considerable military pageantry of the day, and some confusion around inspecting the guard, it was simply for tea with Queen Elizabeth II.

Further details of what will happen during the three-day visit in September will be announced in due course.

On Friday, Sky News revealed it is now unlikely that the US president will address parliament, usually an honour given to visiting heads of state as part of their visit. Some MPs had raised significant concerns about him being given the privilege.

But the House of Commons will not be sitting at the time of Mr Trump’s visit as it will rise for party conference season on the 16 September, meaning the president will not be able to speak in parliament as President Macron did during his state visit this week. However, the House of Lords will be sitting.

In February this year, Prime Minister Sir Keir Starmer presented the US president with the letter from the King inviting him to visit during a meeting at the White House.

After reading it, Mr Trump said it was a “great, great honour”, adding “and that says at Windsor – that’s really something”.

In the letter, the King suggested they might meet at Balmoral or Dumfries House in Scotland first before the much grander state visit. However, it is understood that, although all options were explored, complexities in both the King and Mr Trump’s diaries meant it wasn’t possible.

This week, it emerged that Police Scotland are planning for a summer visit from the US president, which is likely to see him visit one or both of his golf clubs in Aberdeenshire and Ayrshire, and require substantial policing resources and probably units to be called in from elsewhere in the UK.

Precedent for second-term US presidents, who have already made a state visit, is usually tea or lunch with the monarch at Windsor Castle, as was the case for George W Bush and Barack Obama.

UK

Fireball at Southend Airport after small plane crashes

Published

13 hours ago

July 13, 2025

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Fireball at Southend Airport after small plane crashes

A small plane has crashed at Southend Airport in Essex.

Essex Police said it was at the scene of a “serious incident”.

Images posted online showed huge flames and a large cloud of black smoke, with one witness saying they saw a “fireball”.

A police statement said: “We were alerted shortly before 4pm to reports of a collision involving one 12-metre plane.

“We are working with all emergency services at the scene now and that work will be ongoing for several hours.

“We would please ask the public to avoid this area where possible while this work continues.”

It has been reported that the plane involved in the incident is a Beech B200 Super King Air.

According to flight-tracking service Flightradar, it took off at 3.48pm and was bound for Lelystad, a city in the Netherlands.

One man, who was at Southend Airport with his family around the time of the incident, said the aircraft “crashed headfirst into the ground”.

John Johnson said: “About three or four seconds after taking off, it started to bank heavily to its left, and then within a few seconds of that happening, it more or less inverted and crashed.

“There was a big fireball. Obviously, everybody was in shock in terms of witnessing it. All the kids saw it and the families saw it.”

Mr Johnson added that he phoned 999 to report the crash.

Southend Airport said the incident involved “a general aviation aircraft”.

Four flights scheduled to take off from Southend this afternoon were cancelled, according to its website.

Flightradar data shows two planes that had been due to land at Southend were diverted to nearby airports London Gatwick and London Stansted.

Essex County Fire and Rescue Service said four crews, along with off-road vehicles, have attended the scene.

Four ambulances and four hazardous area response team vehicles are also at the airport, as well as an air ambulance, the East of England Ambulance Service said.

Its statement described the incident as “still developing”.

David Burton-Sampson, the MP for Southend West and Leigh, posted on social media: “I am aware of an incident at Southend Airport. Please keep away and allow the emergency services to do their work.

“My thoughts are with everyone involved.”

Local councillor Matt Dent said on X: “At present all I know is that a small plane has crashed at the airport. My thoughts are with all those involved, and with the emergency services currently responding to the incident.”

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UK

Heidi Alexander says ‘fairness’ will be government’s ‘guiding principle’ when it comes to taxes at next budget

Published

20 hours ago

July 13, 2025

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Heidi Alexander says 'fairness' will be government's 'guiding principle' when it comes to taxes at next budget

Another hint that tax rises are coming in this autumn’s budget has been given by a senior minister.

Speaking to Sunday Morning with Trevor Phillips, Transport Secretary Heidi Alexander was asked if Sir Keir Starmer and the rest of the cabinet had discussed hiking taxes in the wake of the government’s failed welfare reforms, which were shot down by their own MPs.

Trevor Phillips asked specifically if tax rises were discussed among the cabinet last week – including on an away day on Friday.

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Tax increases were not discussed “directly”, Ms Alexander said, but ministers were “cognisant” of the challenges facing them.

Asked what this means, Ms Alexander added: “I think your viewers would be surprised if we didn’t recognise that at the budget, the chancellor will need to look at the OBR forecast that is given to her and will make decisions in line with the fiscal rules that she has set out.

“We made a commitment in our manifesto not to be putting up taxes on people on modest incomes, working people. We have stuck to that.”

Ms Alexander said she wouldn’t comment directly on taxes and the budget at this point, adding: “So, the chancellor will set her budget. I’m not going to sit in a TV studio today and speculate on what the contents of that budget might be.

“When it comes to taxation, fairness is going to be our guiding principle.”

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Afterwards, shadow home secretary Chris Philp told Phillips: “That sounds to me like a barely disguised reference to tax rises coming in the autumn.”

He then went on to repeat the Conservative attack lines that Labour are “crashing the economy”.

Mr Philp then attacked the prime minister as “weak” for being unable to get his welfare reforms through the Commons.

Discussions about potential tax rises have come to the fore after the government had to gut its welfare reforms.

Sir Keir had wanted to change Personal Independence Payments (PIP), but a large Labour rebellion forced him to axe the changes.

With the savings from these proposed changes – around £5bn – already worked into the government’s sums, they will now need to find the money somewhere else.

The general belief is that this will take the form of tax rises, rather than spending cuts, with more money needed for military spending commitments, as well as other areas of priority for the government, such as the NHS.