Chancellor Rachel Reeves presented the Spring Statement to Parliament on Wednesday.
She addressed the UK’s urgent need to increase defence spending.
She unveiled measures to tackle a major shortfall in public finances.
Falling growth and rising borrowing costs have weakened government revenue.

Government Enforces New Budget Cuts

Reeves confirmed new spending cuts across multiple sectors.
She finalised adjustments to welfare reforms to save £4.8 billion.
She said these reforms would reduce welfare spending as a share of GDP from 2026.
She pledged £1.4 billion to support people returning to work.
She combined that pledge with cuts to sickness and disability benefits.
She promised a 15% reduction in operational state costs by 2030, worth £2 billion.

UK Boosts Defence Budget, Reduces Foreign Aid

Reeves announced a defence spending increase to 2.5% of GDP starting in April 2027.
She cut overseas aid to 0.3% of gross national income.
She said this shift would save £2.6 billion in 2029–30.
She allocated an additional £2.2 billion for defence next year.
She claimed the funding would boost national and economic security.

Economic Growth Forecast Slashed

The Office for Budget Responsibility halved its 2025 UK growth forecast to 1%.
Last autumn, it expected 2%.
Reeves faces a sluggish economy since mid-2024.
Business confidence has fallen due to tax hikes and wage cost increases.
Both changes will take effect in April.

UK Economy Posts Weak Growth in Q4

The UK economy grew just 0.1% in the fourth quarter.
The Labour government had hoped for stronger results.
Reeves identified growth as her top economic priority.
Since 2008, UK growth has remained below historical averages.

Critics Blame Reeves for Economic Pessimism

Some critics blamed Reeves for recent economic gloom.
They said she took office with a pessimistic tone.
They also blamed her tax increases, especially for businesses.

Inflation Drops, But Outlook Remains Cautious

Reeves welcomed a drop in inflation to 2.8% in February.
The figure dropped from 3% in January.
However, inflation is expected to rise again this year.
The OBR forecast 3.2% inflation for 2025, up from 2.6%.
It expects 2.1% in 2026, down from 2.3%.
Inflation may meet the 2% target in 2027.

Modest Growth Forecasts Continue Through 2029

The OBR predicted 1.9% growth in 2026 and 1.8% in 2027.
It expects 1.7% growth in 2028 and 1.8% in 2029.

Reeves Rules Out Further Tax Hikes

Reeves said the current budget includes no new tax increases.
She already raised taxes by £40 billion last autumn.
She introduced new anti-avoidance measures to gain £1 billion.
Total savings from tax evasion measures now reach £7.5 billion.

Government Aims for Surplus by 2027

Reeves forecast a £36.1 billion deficit in 2025–26.
She expects a £13.4 billion deficit in 2026–27.
She projected a £6 billion budget surplus in 2027–28.

Analysts React to Budget Outlook

Lindsay James from Quilter said the cuts were lighter than expected.
She noted real spending will grow by 1.2% instead of 1.3%.
Sarah Coles from Hargreaves Lansdown welcomed stronger long-term forecasts.
She warned of possible tax hikes if growth targets fail.