OBR slashes UK growth forecast for 2025 but upgrades it for rest of parliament
The Office for Budget Responsibility has halved the UK growth forecast for 2025 from 2% to 1%, Chancellor Rachel Reeves has said.
However, the fiscal watchdog said that while growth has been downgraded for this year, it had been upgraded for every year after for the rest of this parliament – which is due to end in 2029.
The chancellor said she is “not satisfied with the numbers” for this year as she delivered her long-awaited spring statement in the House of Commons.
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But, she explained, the OBR has forecast growth to hit 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.
Some tough forecasts beyond headline figures
The independent forecaster also published its economic outlook on Wednesday, showing there’s a 54% chance the chancellor will not break her self-imposed fiscal rules to bring down government debt and balance the budget by 2030.
Living standards, as measured by household disposable income, will fall after this year to almost no growth in 2027-28 before rising again due to firms rebuilding profit margins, wage growth slowing, taxes rising, and welfare measures taking effect.
The OBR also raised its expectation for unemployment and net migration – the number of people immigrating to the UK minus those emigrating.
The unemployment rate, the percentage of people out of work, will rise to 4.5% this year. This is 0.4 percentage points or 160,000 people higher than first thought in the October forecast.
Net migration will fall sharply, the OBR said, due to a tightening of visa policies and higher levels of emigration. But the forecast has been upped by 25,000 since October as a higher share of immigrants are staying in the UK under the new migration system.
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The Chancellor said the OBR has downgraded the UK growth forecast for 2025 from 2% to 1%.
At the same time, there will be a reduction in people neither in work nor looking for work due to a reduction in caring as birth rates fall and childcare provision is expanded.
But there are also fewer people in this position, classed as “economically inactive” than previously thought, the OBR said. The government launched its welfare cuts in an effort to reduce this economic inactivity.
Further cuts are to come, the OBR said, as “unprotected” government departments such as local government justice, the environment, Home Office and culture may need to be cut by 0.8% a year from 2026-27 “to accommodate assumed commitments in other areas”.
Prices overall will go up even higher than initially anticipated, according to the OBR, which now forecasts inflation will rise to 3.8% in July due to higher energy, food and water bills. This will fall rapidly, however, from next year.
‘No shortcuts to growth’
Ms Reeves told MPs: “There are no shortcuts to economic growth. It will take long-term decisions. It will take hard yards. It will take time for the reforms we are introducing to be felt in the everyday economy.
“It is right that the Office for Budget Responsibility consider the evidence and look carefully at measures before recognising a growth impact in their forecast.”
The chancellor pointed to changes to the National Planning Policy Framework, saying mandatory housing targets and bringing “grey belt” land into scope for development will “permanently increase the level of real GDP by 0.2% by 2029-30”.
This will bring an “additional £6.8bn in our economy and by 0.4% of GDP within the next 10 years”, she said.
Ms Reeves also highlighted reforms to the pension system and a national wealth fund, adding it was part of a “serious plan” for economic growth.
Also announced in the spring statement today:
- The 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;
- The Office for Budget Responsibility estimates Labour’s cuts to the welfare budget will save £4.8bn, with changes going further than initially thought;
- Reeves says the health element of universal credit will be cut by half and frozen for new claimants;
- There are no more tax rises today, but the chancellor claims she’ll raise an extra billion pounds by cracking down more on tax evasion;
- Day-to-day spending will be protected, other than the aid budget, with spending increasing above inflation every year;
- The defence budget will get a £2.2bn boost for next year, paving the way for spending eventually hitting 2.5% of GDP;
- House building will hit a 40-year-high thanks to Labour’s planning reforms.
The chancellor confirmed that a voluntary redundancy scheme is set to launch for civil servants as part of her mission to “make government leaner”. She said this will deliver £3.5bn in “day-to-day savings by 2029-30”.
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Ed Conway examines chancellor’s numbers
Political reaction
Shortly afterwards, Conservative leader Kemi Badenoch accused Labour of financial “chaos”.
She said the spring statement was “all smoke and mirrors”, adding: “I remember the last budget when Rachel Reeves said she was smashing glass ceilings, now it feels like the roof is falling over all our heads.”
A handful of Labour MPs were unimpressed with the moves around welfare, with Debbie Abrahams – the MP for Oldham East and Saddleworth – claiming “all the evidence points to cuts in welfare leading to severe poverty and worsened health conditions”.
An impact assessment into Labour’s welfare reforms, which include narrowing the eligibility criteria for personal independence payments (PIP), found there could be an additional 250,000 people in “relative poverty” by 2030 due to the changes.
Richard Burgon, the Labour MP for Leeds East, said “taking away the personal independence payments” from disabled people is an “especially cruel choice”.
Binance has discontinued spot trading pairs with Tether’s USDt in the European Economic Area (EEA) to comply with the Markets in Crypto-Assets Regulation (MiCA).
Cryptocurrency exchange Binance has delisted spot trading pairs with several non-MiCA-compliant tokens in the EEA in line with a plan disclosed in early March, Cointelegraph has learned.
While spot trading pairs in tokens such as USDt (USDT) are now delisted on Binance, users in the EEA can still custody the affected tokens and trade them in perpetual contracts.
USDT is available for perpetual trading on Binance. Source: Binance
According to a previous announcement by Binance, the spot trading pairs for non-MiCA-compliant tokens were to be delisted by March 31, which is in line with a local requirement to delist such tokens by the end of the first quarter of 2025.
Delistings on other exchanges in EEA
Binance is not the only crypto exchange delisting non-MiCA-compliant tokens for spot trading in the EEA.
Other exchanges, such as Kraken, have delisted spot trading pairs in tokens such as USDT in the EEA after announcing plans in February.
According to a notice on the Kraken website, the exchange restricted USDT for sell-only mode in the EEA on March 24. At the time of writing, the platform doesn’t allow its EEA users to buy the affected tokens.
Kraken restricted USDT to sell-only mode in the EEA on March 24. Source: Kraken
Among other non-MiCA-compliant tokens, Binance has also delisted spot trading pairs for Dai (DAI), First Digital USD (FDUSD), TrueUSD (TUSD), Pax Dollar (USDP), Anchored Euro (AEUR), TerraUSD (UST), TerraClassicUSD (USTC) and PAX Gold (PAXG).
Related: Tether acquires 30% stake in Italian media company Be Water
Kraken’s delisting roadmap in the EEA only included five tokens: USDT, PayPal USD (PYUSD), Tether EURt (EURT), TrueUSD and TerraClassicUSD.
ESMA doesn’t prohibit custody of non-MiCA-compliant tokens
Binance and Kraken’s move to maintain custody services for non-MiCA-compliant tokens aligns with a previous communication from MiCA compliance supervisors.
On March 5, a spokesperson for the ESMA told Cointelegraph that custody and transfer services for non-MiCA-compliant stablecoins do not violate the new European cryptocurrency laws.
On the other hand, the same regulator previously advised European crypto asset service providers to halt all transactions involving the affected tokens after March 31, adding a certain extent of confusion over MiCA requirements.
Magazine: How crypto laws are changing across the world in 2025
Vanuatu has passed laws to regulate digital assets and provide a licensing regime for crypto companies wanting to operate in the Pacific island nation, which a government regulatory consultant has called “very stringent.”
The local parliament passed the Virtual Asset Service Providers Act on March 26, giving crypto licensing authority to the Vanuatu Financial Services Commission (VFSC) along with powers to enforce the Financial Action Task Force’s Anti-Money Laundering, Counter-Terrorism Financing and Travel Rule standards with crypto firms.
The VFSC has sweeping investigation and enforcement powers under the laws, with penalties stipulating fines of up to 250 million vatu ($2 million) and up to 30 years in prison.
“God help any scammer that goes into Vanuatu because you’ll go to jail,” Loretta Joseph, who consulted with the regulator on the laws, told Cointelegraph. “The laws are very stringent.”
“The thing is, we don’t want another FTX debacle,” she added, referring to the once Bahamas-based crypto exchange that collapsed in 2022 due to massive fraud committed by its co-founders, Sam Bankman-Fried and Gary Wang, along with other executives.
“Vanuatu is a small jurisdiction. Small jurisdictions are preyed on by the players that are looking for no regulation or light touch regulation,” Joseph said. “This is certainly not that.”
“I’m so proud of them to be the first country in the Pacific to actually take a position and do this,” she added.
New Vanuatu law regulates slate of crypto companies
The law establishes a licensing and reporting framework for exchanges, non-fungible token (NFT) marketplaces, crypto custody providers and initial coin offerings.
The law notably allows for banks to be licensed to provide crypto exchange and custody services. Source: Parliament of the Republic of Vanuatu
The VFSC said that the legislation doesn’t affect stablecoins, tokenized securities, and central bank digital currencies even though they “may in practice share some similarities with virtual assets.”
The legislation also allows for the VFSC’s commissioner to create a sandbox to allow approved companies to offer a variety of crypto services for a year, which can be renewed.
Related: Australia outlines crypto regulation plan, promises action on debanking
Joseph said Vanuatu “needed a standalone piece of legislation” that covered Anti-Money Laundering and Counter-Terror Financing requirements, as the country didn’t have existing laws suited to virtual assets.
The regulator said in a March 29 statement that it had developed the legislative framework after years of “assessing the risks associated with virtual assets,” and the laws would open “numerous opportunities for Vanuatu” and improve financial inclusion by allowing regulated services for crypto cross-border payments.
VFSC Commissioner Branan Karae had said in June that the bill was expected to pass that September, but Joseph said the legislation was “not something that was done lightly.” It had been in development since 2020 and was delayed due to changes in government, natural disasters and COVID-19 pandemic-related disruptions.
Magazine: How crypto laws are changing across the world in 2025
Coinbase CEO Brian Armstrong is calling for legislative changes in the US to allow stablecoin holders to earn “onchain interest” on their holdings.
In a March 31 post on X, Armstrong argued that crypto companies should be treated similarly to banks and be “allowed to, and incentivized to, share interest with consumers.” He added that allowing onchain interest would be “consistent with a free market approach.”
Source: Brian Armstrong
There are currently two competing pieces of federal stablecoin legislation working their way through the legislative process in the US: the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act, and the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act.
In reference to the stablecoin legislation, Armstrong said the US had an opportunity to “level the playing field and ensure these laws pave a way for all regulated stablecoins to deliver interest directly to consumers, the same way a savings or checking account can.”
Armstrong: Onchain interest a boon for US economy
Armstrong argued that while stablecoins have already found product-market fit by “digitizing the dollar and other fiat currencies,” the addition of onchain interest would allow “the average person, and the US economy, to reap the full benefits.”
He said that if legislative changes allowed stablecoin issuers to pay interest to holders, US consumers could earn a yield of around 4% on their holdings, far outstripping the 2024 average interest yield on a consumer savings account, which Armstrong cited as 0.41%.
Armstrong also said onchain interest could benefit the broader US economy — by incentivizing the global use of US dollar stablecoins. This could see their use grow, “pulling dollars back to U.S. treasuries and extending dollar dominance in an increasingly digital global economy,” according to the Coinbase CEO.
He also argued that the potential for a higher yield than traditional savings accounts would result in “more yield in consumers’ hands means more spending, saving, investing — fueling economic growth in all local economies where stablecoins are held.”
“If we don’t unlock onchain interest, the U.S. misses out on billions more USD users and trillions in potential cash flows,” Armstrong added.
Currently, neither the STABLE Act nor the GENIUS Act gives the legal go-ahead for onchain interest-generating stablecoins. In fact, in its current form, the STABLE Act includes a short passage prohibiting “payment stablecoin” issuers from paying yield to holders:
Source: STABLE Act
Related: Stablecoins, tokenized assets gain as Trump tariffs loom
Similarly, the GENIUS Act, which recently passed the Senate Banking Committee by a vote of 18-6, has been amended to exclude interest-bearing instruments from its definition of a “payment stablecoin.”
Commenting on the current state of the STABLE Act, Representative Bryan Steil told Eleanor Terrett, host of the Crypto in America podcast, that two pieces of legislation are positioned to “mirror up” following a few more draft rounds in the House and Senate — due to the differences between them being textual rather than substantive.
“At the end of the day, I think there’s recognition that we want to work with our Senate colleagues to get this across the line,” Steil said.
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