Today, Chancellor Rachel Reeves is set to deliver the UK’s 2025 Spring Statement, outlining the government’s economic plans amidst a challenging fiscal landscape. With a backdrop of sluggish growth, rising debt, and mounting pressure on public services, the statement is expected to balance tough fiscal decisions with a vision for long-term stability.
Public Spending Cuts
One of the most significant announcements expected is a major reduction in public spending. Reeves is anticipated to introduce a 15% cut in Civil Service running costs, which could affect around 10,000 jobs. This move is aimed at streamlining government operations and curbing departmental budgets in an effort to rein in public expenditure.
Welfare Reform
Further welfare reforms are also on the cards, with the government targeting £5 billion in savings by 2029/30. These cuts are likely to focus on health-related benefits, such as Universal Credit and Personal Independence Payment, as part of a broader drive to encourage employment and reduce long-term dependency on state support.
Economic Forecasts Downgraded
Adding to the sombre tone, the Office for Budget Responsibility (OBR) is expected to halve its growth forecast for 2025 from 2% to just 1%. This reflects the ongoing drag from higher interest rates, weak productivity, and global economic uncertainty. The downgraded forecast signals limited fiscal headroom for any major spending increases or tax giveaways.
No Major Tax Changes
Despite speculation, no significant tax changes are expected in this statement. Reeves is likely to hold off on any large fiscal moves until the Autumn Budget, choosing instead to use this update to lay the groundwork for future decisions. This approach allows for more data-driven policy shifts later in the year, once economic trends are clearer.
Boost to Defence Spending
In contrast to the spending cuts elsewhere, the government is poised to increase defence funding by £2.2 billion. This aligns with the UK’s broader strategic commitment to bolster national security in response to global threats and evolving geopolitical tensions.
A Balancing Act
Today’s Spring Statement is expected to reflect the government’s effort to restore economic credibility while addressing the cost of living, maintaining essential services, and preparing for future investments. With little room for manoeuvre, Rachel Reeves faces the delicate task of reassuring markets and the public alike that the UK is on a path to sustainable growth.