Anticipated in the upcoming spring statement later this month are significant spending cuts amounting to several billion pounds, including reductions from the welfare budget.
The Treasury is scheduled to present the proposed cuts to the Office of Budget Responsibility (OBR) on Wednesday, preceding the financial forecast on 26 March, coinciding with Chancellor Rachel Reeves’ spring statement announcement.
Sky’s deputy political editor, Sam Coates, disclosed on the Politics at Jack and Sam’s podcast that welfare cuts are poised to be a component of the spring statement package to assist the chancellor in adhering to her borrowing limits.
Coates outlined a «four-point plan» that includes planning reform, Whitehall cuts, regulation cuts, and welfare cuts.
Following months of economic decline and geopolitical upheaval since the last October budget, Ms. Reeves finds herself nearing the end of her £9.9 billion headroom.
Her self-imposed fiscal regulations restrict her from borrowing for day-to-day expenses, leaving spending cuts as one of her limited choices.
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During the weekend, Sir Keir Starmer remarked that the government is in the «early stages» of exploring whether tax increases or spending cuts are necessary to comply with Labour’s self-imposed fiscal guidelines.
The prime minister declined to confirm whether additional tax hikes or spending cuts would be implemented.
While the OBR is obligated to provide two economic forecasts annually, the chancellor stated that she would only present one budget per year to ensure stability and certainty regarding forthcoming tax adjustments.
Nevertheless, the challenging economic climate since October has forced her hand, with inflation reaching a 10-month peak at 3%, a notable increase in government bond yields, and growth falling short of expectations.
Donald Trump’s imposition of tariffs on Canada, Mexico, and China – the US’ primary trading partners – this week led to retaliatory promises and a significant decline in global stock markets on Tuesday.
Although the UK has not yet been impacted by tariffs, the chancellor cautioned that the British economy would still suffer from the repercussions of the US president’s trade war, even if the UK secures a deal with the White House.
«It’s unequivocal that even without tariffs affecting the UK, we will experience the effects of sluggish global trade, slower GDP growth, and higher inflation compared to what would otherwise occur,» she informed numerous top British manufacturers at a pivotal industry conference.