What to expect in Rachel Reeves’ Spring Statement
The spring budget is set to be announced this Wednesday, with Chancellor Rachel Reeves expected to announce more spending cuts, following the slashing of £5 billion from welfare spending, in order to offset the financial strain of recent borrowing.
UK Chancellor Rachel Reeves
However, there are allegedly no plans to increases taxes. UK wages grew by 5.9% in three months to January according the the Office for National Statistics and inflation has been kept at 2.5% according to the Bank of England. GDP increased by 0.1% in the last quarter of 2024, higher than other European allies such as France and Germany.
Despite a seemlingly stabilising economy though, hiring rates are down as employers fear that the global economy currently is too risky to take on new workers, with new world leaders being elected and U.S. Preisdent Donald Trump’s frequent use of tarriffs on allies proving to be a deterrent to investment.
Whether this budget is good or not will largely depend on what parts of it personally affect people, as well as the surrounding economic and policy changes that could impact the Spring Statement. Mimimum wage is increasing in April, from £11.44 to £12.21, but disability welfare spending cuts could further disadvantage people who already struggle to work/make a liveable wage.
Alongside these spending cuts however, is a 2.5% increase in spending for defense.
This is in response to wavering faith in the U.S. to respond to a foreign threat in regards to Article 5 of NATO as President Trump threatens to not protect allies who don’t spend above the NATO threshold of investing 2% of GDP into Defence and has posited the idea of the U.S. withdrawing from NATO completely.
This is with rumours of further spending cuts that might see several departments lose up to 7% of their annual budget over the course of several years.
A large part of this is still speculation however, and we will have no official details of what the Spring Statement entails until it is announced on Wednesday.