Five things we learned from Rachel Reeves’ Spring Statement 2025
Today Rachel Reeves, the UK Chancellor, has finally revealed the long-awaited Spring Statement 2025, detailing the government’s plan for the economy under uncertain global circumstances and in light of recent challenges in the UK itself. Here’s a rundown of some of the key takeaways, including major policy changes, fiscal projections and economic challenges.
Economic Outlook: OBR Cuts Growth Forecast
The Office for Budget Responsibility (OBR) has slashed the forecast for the UK’s economic growth in 2025 to just 1% from the previously expected 2%. But the long-term picture has improved slightly, as GDP is projected to grow 1.9% in 2026, stabilizing around 1.8% by 2029. But these projections have been clouded by concerns over slow productivity, external economic pressures, and rising borrowing costs.
Deep Welfare Cuts: Changes to Universal Credit & PIP
Reeves’ spring budget includes nearly £5bn cuts to welfare — one of the most controversial elements of the 2024 budget — which will hit millions of UK households hard. Over 3 million families will lose £1,720 on average a year because their benefits have been cut. And it will freeze the health component of Universal Credit from 2029-30 and reduce it from 2026 for new claimants. Personal Independence Payment (PIP) eligibility will be reassessed, and new conditions will be introduced to restrict access to support. Funding for centers increased by £400m to help people find work and to get more people into work
The Chancellor’s Balancing Act: Inflation & Fiscal Rules
Inflation has fallen somewhat, at 2.8% in February 2025. The government is working towards the Bank of England’s 2% inflation target by 2027. Reeves reiterated her vow to stick to strict fiscal rules, which she said would provide financial stability for the UK. A budget deficit that could have reached £4.1bn has been reshaped into a forecast £6bn surplus by 2027-28 and £9.9bn by 2029-30.
Public Spending: Where the Money Goes Defend
The defence budget now expands to 2.5% of GDP by 2027 and the spending review allocated an extra £2.2bn (3.6bn) for improving the armed forces Ensure we have £3.25 billion to invest in AI and digital government transformation that will enable us to reduce operational costs and increase efficiency. £100bn capital project spend from the last budget bullshit continues, with an extra £2bn per yr for infrastructure. There will be, we are told, an overhaul of NHS England, with funding diverted to direct patient care.
While no tax increases were announced, Reeves promised to combat tax cheating with sophisticated tools powered by artificial intelligence. It should raise £7.5bn in additional income, this initiative recovering £1bn in unpaid taxes.
Housing & Planning Reforms: Boost to Economic Growth?
The government aims to build 1.3 million new homes over five years and expects to boost UK GDP by 0.6% by 2034-35. OBR estimates housebuilding will reach 305,000 per year, a 40-year high. To back this, £2bn will be invested in affordable housing, and 60,000 workers will be trained in construction skills to match demand.
Will Labour’s Political Bet Pay Off?
Reeves’ budget homes in on economic stability and long-run growth but not without controversial cuts to welfare spending. But critics say, if you are cutting benefits and funding decrepit infrastructure spending at the same time, then you are going to unwind the economy. As the next election looms, Labour’s capacity to balance economic prudence with social support will be a much-tested measure of public trust.
How to Watch Spring Statement 2025 Live?
Follow coverage of the UK Budget 2025 live on BBC News, Sky News, and HM Treasury’s live updates. Rachel Reeves Budget: Latest Updates & Impact on UK Economy
What do you think about the Spring Statement 2025? Do you back Rachel Reeves’ economic plan? Let us know what you think in the comments below!
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