Rachel Reeves delivered her Spring Statement against a grim economic outlook, confirming the Office for Budget Responsibility (OBR) slashed its 2025 growth forecast from 2% to 1%—a setback for the Government’s economic growth pledge. She admitted, “I’m not satisfied with these numbers,” but noted upgraded growth forecasts for 2026 onwards.

The OBR also revised its fiscal outlook, projecting a £4.1bn deficit by 2029/30, down from an earlier £9.9bn surplus forecast. Reeves claimed today’s measures would restore the surplus to £9.9bn. Inflation offered some relief, dropping to 2.8% in February—below the expected 2.9%—though it’s still above the Bank of England’s 2% target.

-On welfare, Reeves confirmed £5bn in cuts, adjusting disability and sickness benefits. Universal Credit will rise from £92 to £106 weekly by 2029/30, but the health element will halve and freeze for new claimants. She told MPs: “We believe that if you can work, you should work and if you can’t, you should be properly supported.” The OBR estimates £4.8bn in annual savings.

-Whitehall faces a £2bn efficiency drive, cutting running costs by 15% by decade’s end, alongside a £3.25bn “transformation fund” for AI, justice upgrades, and civil service redundancies—potentially axing 50,000 jobs. Day-to-day spending will drop by £6.1bn by 2029/30.

-Defence spending will rise to 2.5% of GDP by 2027, with a £2.2bn injection next year and 10% of the budget earmarked for drones and AI. A £400m innovation fund will fast-track new tech.

-Planning reforms will reinstate housing targets and ease Green Belt rules, boosting GDP by £6.8bn annually by decade’s end. Reeves said: “That is the biggest positive growth impact that the OBR have ever reflected in their forecast, for a policy with no fiscal cost.”

-No new tax rises were announced, but a £7.5bn tax evasion crackdown aims to catch more evaders. Reeves stressed: “When working people are paying their taxes, while still struggling with the cost-of-living, it cannot be right that others are still evading what they rightly owe.”

It is worth noting that the opposition describes this budget as an "emergency budget" highlighting the failures of the previous budget to match expected targets. Labour will be hoping that no such U-turn will be needed this time.