Chancellor Rachel Reeves is poised to deliver the spring statement on Wednesday lunchtime in an update on the UK economy and public finances.
The statement will provide an update on progress against the government’s economic objectives and will be accompanied by a published fiscal forecast from the Office for Budget Responsibility (OBR). The OBR produces detailed five-year forecasts for the economy and public finances twice a year which accompany the autumn Budget Statement and the Spring Statement, and these include the impact of any tax and spending measures announced in these statements by the Chancellor.
When is the spring statement?
Reeves will deliver the spring statement in the House of Commons on Wednesday, March 26, at approximately 12.30pm after Prime Minister’s Questions, according to the UK Parliament website.
What is Rachel Reeves expected to announce?
Unlike the statement in autumn, the spring statement is not a formal budget but instead an update on the economy since the Budget announcement in October last year.
The statement is expected to largely be a response to the OBR’s fiscal forecast, but there is speculation of possible announcements on spending and, potentially, tax, to ensure the fiscal rules are met.
UK Parliament states: “The Chancellor wants to only make major tax and spending announcements once a year, in the Budget.
“It was therefore expected that the Spring Statement would be limited, with the Chancellor largely responding to the OBR’s second forecast of the financial year. However, there is now speculation that there might also be some policy announcements.”
Reeves has ruled out “tax and spend” policies which suggests an increase in taxes isn’t looming, but she is expected to announce some spending cuts.
New policies could include stricter rules for Personal Independence Payments (PIP), a freeze on incapacity benefits, and an extension to the freeze on thresholds at which people start to pay different rates of income tax.
Experts estimate that around a million people in England and Wales will lose their disability benefits as part of a welfare overhaul that the government believes will save more than £5 billion a year by the end of the decade. The government says the overhaul is part of efforts to get young people back into work.
Reeves is also expected to announce increased spending on the government’s new UK Defence Investment body.
The Chancellor has also pledged to slash more than £2 billion a year from the civil service budget by the end of the decade as part of the Government’s spending review. The Cabinet Office will tell departments to first cut their administrative budgets by 10% by 2028-29 to save £1.5 billion a year, and then 15%, which is expected to save £2.2 billion a year by 2029-30.
