The UK Chancellor, Rachel Reeves, has outlined her plans for the country’s economy during her Spring Statement in the House of Commons. The government aims to boost housebuilding by 170,000 over five years through changes to England’s planning system.
The UK Chancellor, Rachel Reeves, has outlined her plans for the country’s economy during her Spring Statement in the House of Commons. The Office for Budget Responsibility (OBR) has also released its latest economic forecasts.
Rachel Reeves is a British politician serving as the Member of Parliament for Leeds West since 2005.
She is a member of the Labour Party and has held various shadow cabinet roles, including Shadow Chief Secretary to the Treasury and Shadow Minister for Climate Change and Net Zero.
Reeves has been involved in several high-profile campaigns, including advocating for greater transparency in government spending and promoting climate action.
Changes to welfare payments will see health-related universal credit for new claimants delayed until after 2030. Existing claimants’ health-related payments will be frozen at £97 per week until 2030, with a new top-up payment introduced for those with the most severe conditions. Under-22s will no longer be able to claim the incapacity benefit top-up.
The OBR has downgraded predicted growth for this year from 2% to 1%, but upgraded estimated growth for the next four years, to 1.9% next year, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029. Inflation is forecast to average 3.2% this year, up from 2.6% previously forecast, before falling back to 2.1% in 2026.
The OBR estimates that changes to England‘s planning system will boost housebuilding by 170,000 over five years. The changes are forecast to grow the size of the economy by 0.2% by 2030, and 0.4% by 2035. £625m will be spent in England over four years to boost existing schemes to train workers in the construction sector.
The OBR says that without action, the government would have been on course to miss its self-imposed rule to balance spending against taxes by 2030. A £9.9bn financial buffer against this target has been wiped out, with the Treasury blaming higher debt costs. The chance of meeting the government’s other main rule, that public debt is projected to be falling as a share of the economy, remains at 51%.
Defence spending will increase by £2.2bn next year, taking military expenditure to 2.36% of national income. This will be funded by reducing overseas aid from 0.5% to 0.3% of gross national income in 2027.
According to the Stockholm International Peace Research Institute (SIPRI), global defence spending reached $1.98 trillion in 2020, a 3.6% increase from the previous year.
The United States accounts for approximately 38% of total global defence expenditure, followed by China at 15%, and India at 4%.
The top five spenders are also among the world's largest economies, highlighting the link between economic power and military capabilities.
Day-to-day government spending is expected to fall by £6.1bn per year by 2030, growing by 1.2% in real terms after 2026. The target to reduce the administrative costs of government departments by 15% by 2030 will be met.
A pledge to hire 400 more HMRC staff to tackle ‘wealthy offshore non-compliance’ is expected to bring in an extra £500m over five years. A new US-style scheme to be launched later this year, under which tax avoidance ‘informants’ will get a slice of any money recovered, will also be introduced.
- theguardian.com | Spring statement 2025: key points at a glance
- bbc.com | Spring Statement 2025: Key points at a glance
