The Chancellor’s Rachel Reeves Spring Statement was made today, and we will look at the main points.
The Chancellor emphasised the government’s responsibility to safeguard Britain’s future amidst rapid global change.
The invasion of Ukraine by Putin has dramatically altered the geopolitical landscape, exacerbating existing threats.
No Tax Increases
The Chancellor has pledged no new tax increases, emphasizing fairness for working taxpayers.
To combat tax evasion, the Treasury will today unveil plans to boost charges against tax fraudsters by 20% annually.
This initiative aims to generate £7.5 billion in additional revenue, a figure verified by the Office for Budget Responsibility (OBR).
Benefits-Universal Credit
In the Spring Statement, Reeves positions Labour as the “party of work,” emphasizing a principle of work when able and support when unable.
She cites OBR estimates indicating her welfare package will yield £4.8 billion in savings.
Key changes include raising the Universal Credit standard allowance from £92 to £106 per week by 2029/30 while simultaneously reducing the Universal Credit health element by 50% for new claimants, followed by a freeze.
Defence
The Chancellor confirms two steps we’ve known for several weeks the government was going to take.
Defence spending will increase to 2.5% of the GDP, a hike that will be achieved by cutting overseas aid to 0.3% of the gross national income.
This will be 2.2bn next year.
Read the statement in full here.
The Bank of England, interest rates and the effects, read here
OBR Forecast reduced
The OBR has revised the UK’s growth forecast for 2025 from 2% in the autumn to 1% today.
” I am not satisfied with these numbers” she says, but she adds that the government is “serious about taking the action needed to grow our economy”
The Spring Statement and Inflation
Reeves emphasizes the need for government and Bank of England collaboration to combat economic uncertainty.
She stresses supporting the independent Monetary Policy Committee in achieving the 2% inflation target.
Projecting inflation’s return to 2% by 2027, down from a Tory-era peak of 11%, she argues this will provide the necessary stable foundation for economic growth.
Education
Reeves highlights the government’s recent education announcement, detailing a £600 million investment to train 60,000 new construction workers.
This initiative includes the establishment of 10 new technical excellence colleges nationwide.
Better Off
Reeves announces positive economic news, citing OBR confirmation that real household disposable income will grow nearly twice as fast as previously forecast.
She states that the OBR analysis shows households will be, on average, £500 better off under the current government.
The World is Changing
Reeves ends the speech by repeating the ‘world is changing’
“We can see that, and we can feel it. A changing world demands a government that is on the side of working people,” she goes on.
She says the government’s plan to get Britain building will drive economic growth and put more money in people’s pockets.
