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Billions of pounds in spending cuts - including welfare - expected in spring statement
The chancellor's self-imposed fiscal rules mean she cannot borrow for day-to-day spending - leaving cuts as one of her only options.
By Alix Culbertson, Political reporter @alixculbertson

Wednesday 5 March 2025 11:05, UK

Rachel Reeves speaks to the media after a visit to Maidstone Hospital.
Pic: PA
Image:
Pic: PA
Several billion pounds in spending cuts - including from the welfare budget - are expected in the spring statement later this month.

The Treasury will put forward the proposed cuts to the Office of Budget Responsibility (OBR) on Wednesday, ahead of it providing a financial forecast on 26 March, alongside Chancellor Rachel Reeves announcing her spring statement.

Sky's deputy political editor Sam Coates revealed on the Politics at Jack and Sam's podcast that welfare cuts are set to be part of the spring statement package to help the chancellor come within her borrowing limit.

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Coates said there would be a "four-point plan" involving planning reform, Whitehall cuts, regulation cuts and welfare cuts.


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The Treasury believes Ms Reeves must maintain a £10bn headroom after months of economic downturn and geopolitical events since last October's budget.

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Related Topics:
Rachel Reeves
Spring Statement
Her self-imposed fiscal rules mean she cannot borrow for day-to-day spending, leaving spending cuts as one of her only options.


'I am not satisfied with the level of growth'
Sir Keir Starmer said last week the government was in the "early stages" of looking at whether tax rises or spending cuts were needed to meet Labour's self-imposed fiscal rules.

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The prime minister refused to say whether further tax rises or spending cuts would be imposed.

The OBR is required to produce two economic forecasts a year, but the chancellor said she would only give one budget a year to provide stability and certainty on upcoming tax changes.

However, the poor economic climate since October is forcing her hand, with inflation hitting a 10-month high of 3% in January, a sharp rise in government bond yields and growth has not been as high as expected.

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Donald Trump imposed tariffs on Canada, Mexico and China - the US's biggest trading partners - this week, prompting retaliation as stock markets fell sharply around the world.

The UK has not been hit by tariffs yet, but the chancellor said the British economy will still be affected by the US president's trade war even if the UK strikes a deal with the White House.

"It's absolutely the case that even if tariffs aren't applied to the UK we will be affected by slowing global trade, by slower GDP growth and by higher inflation than otherwise would be the case," she told hundreds of top British manufacturers at a key industry conference on Tuesday.


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