Chancellor of the Exchequer Rachel Reeves has delivered her Spring Statement against an increasingly bleak global economic backdrop
Against an increasingly bleak global economic backdrop, Chancellor of the Exchequer Rachel Reeves today delivered her Spring Statement. She said the job of a responsible government was not ‘stepping back, but stepping up’, as she emphasised the UK’s fundamental economic resilience.
Providing an update on the public finances, Reeves stated that, while increased global uncertainty had affected the UK economy and public finances, the UK has continued to meet Labour’s fiscal rules, and that fiscal headroom will be restored, reaching £9.9 billion of surplus by 2029–30 according to the Office for Budget Responsibility (OBR). She confirmed further details would be provided at the Spending Review in June and at the next Budget in the autumn.
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Inflation is projected to fall to the government’s 2% target from 2027, while economic growth has been downgraded to a projection of just 1% for 2025, down from a 2% projection at October’s Budget. However, growth forecasts for the following four years have been uprated.
Furthermore, according to the OBR’s economic scoring, the Government’s proposed planning reforms will permanently boost economic growth, by 0.2% by 2030 and 0.4% within 10 years. Meanwhile, house building is projected to reach a 40-year high, with 1.3 million new homes projected to be built over the next five years against the Government’s target of 1.5 million.
Reeves confirmed controversial plans to cut welfare to save a total of £3.4 billion, to cut civil service numbers and to abolish NHS England. These are likely to prove controversial with Labour MPs, with No. 10 reportedly on watch for potential resignations from the government front bench in protest.
Reeves announced £3.25 billion in funding for a new Transformation Fund to transform how government works, as well as an increase in capital funding by an average of £2 billion per year to drive investment in public services and defence.
While a relatively low-key statement for the energy and infrastructure sectors, the Spring Statement was indicative of the difficult decisions the Government faces in the years ahead, as it struggles to balance increased demands for security spending with a need for greater investment in public services and its central mission of boosting growth. It seems planning reform will play a key role in this mission. That is encouraging, but only time will tell as to whether it becomes reality.
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Read our report on the Spring Statement and what it means for the energy and infrastructure sectors.
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