In a surprise move, the UK Chancellor will unveil her plans for the economy during the Spring Statement on Wednesday 26 March, amidst weak economic performance and global events.
The UK chancellor will set out her plans for the economy during the Spring Statement on Wednesday 26 March. ‘the world has changed,’ said the chancellor, and the government must respond accordingly.
Global transformations have been driven by technological advancements, shifting societal values, and environmental pressures.
The Industrial Revolution marked a significant turning point in human history, introducing mechanization and mass production.
The digital age has brought about unprecedented connectivity and access to information.
Climate change and sustainability concerns are now major drivers of global changes, as nations strive for balance between economic development and ecological preservation.
Rachel Reeves has ruled out further tax rises, but faces difficult choices due to the weak performance of the UK economy and world events.
Rachel Reeves is a British politician serving as the Member of Parliament for Leeds West since 2005.
She was born on February 18, 1979, in 'Sheffield' , England.
Reeves studied at Oxford University and began her career in politics working for several Labour Party leaders.
In 2010, she became the Shadow Chief Secretary to the Treasury and later served as the Shadow Work and Pensions Secretary.
The Office for Budget Responsibility (OBR) will publish its forecast for the UK economy and say whether it thinks the government will stick to its self-imposed rules on borrowing and spending.
Reeves has two main fiscal rules: not to borrow to fund day-to-day public spending and to get government debt falling as a share of national income by the end of this parliament.
Welfare spending cuts designed to save £5bn a year by 2030 were announced on 18 March. These include stricter tests for Pip payments, affecting hundreds of thousands of claimants, and a freeze on incapacity benefits.
However, Reeves is now expected to expand the welfare cuts after the OBR calculated that the reforms would save at least £1bn less than planned.
The chancellor has pledged to reduce government running costs by 15% by the end of the decade. About 10,000 civil service jobs are expected to go, including staff who work in HR, policy advice, communications and office management.
This measure is part of the government’s efforts to make up for lost revenue from tax rises.
Reeves is expected to confirm a £2.2bn increase in defence spending. This will help the government meet its existing pledge to spend 2.5% of national income on defence by 2027.
Personal tax rises have been repeatedly ruled out. However, UK taxes on big firms may change as part of a deal to avoid US trade tariffs. This could include the 2% Digital Services Tax (DST), which raises about £800m a year from global tech giants like Amazon and Meta.
The UK economy is currently growing slowly, with the Bank of England halving its growth forecast for the UK in 2025.
The latest monthly figures show that the economy shrank by 0.1% in January. When an economy is growing slowly or contracting, businesses may not take on extra workers or give pay rises, leading to lower profits and reduced tax revenue.
Inflation is rising faster than wanted, with the current rate above the Bank of England’s 2% target.
The Bank moves interest rates to try and keep inflation on target, but cuts are less likely when prices rise above 2%. Higher interest rates make loans, credit cards, and some mortgages more expensive, but mean better returns for savers.
Reeves has warned that a potential global trade war – as a result of new worldwide US tariffs – would further lower growth and raise inflation. This highlights the challenges facing the UK economy and the need for careful planning to mitigate its impact.
A global trade war is a period of increased protectionism and tariffs imposed by countries on imported goods.
This can lead to retaliatory measures from other nations, causing a cycle of escalating tensions.
The effects of a global trade war include higher prices for consumers, reduced economic growth, and potential job losses.
Major players in the 2019-2020 trade war included the United States, China, and the European Union.
Trade agreements such as NAFTA and the WTO (World Trade Organization) aim to reduce barriers and promote free trade.
