Reeves announces spending cuts to address budget shortfall

UK Finance Minister Rachel Reeves announces spending cuts to address budget shortfall, while prioritising growth and working people’s needs.

In Short

Britain’s Finance Minister Rachel Reeves announced spending cuts to address a budget deficit, emphasising the need to reduce debt and boost employment through welfare savings. She committed to fiscal rules aiming to match daily spending with tax revenues while increasing defence spending and promoting housebuilding for economic growth.

Britain’s Finance Minister Rachel Reeves announced significant spending cuts on Wednesday to address a budget shortfall due to stalling growth and increased borrowing costs.

She stated that reducing debt and borrowing is essential to prioritise spending for working people.

Reeves highlighted welfare cuts expected to save £4.8 billion and promote employment. She proposed advancing investment spending and tackling tax avoidance to enhance Treasury revenues.

Tax revenue

Acknowledging global uncertainties, she revealed plans to raise defence spending to 2.5% of GDP, funded by cuts in overseas aid. Reeves also mentioned that Labour government’s planning reforms would boost housebuilding, facilitating economic growth.

She reaffirmed her commitment to her fiscal rules established in the Autumn Budget, aiming to match day-to-day spending with tax revenues and decrease public debt by 2029-30.

On Wednesday, Reeves insisted her new policies would allow her to meet stability and investment rules two years early.

The Spring Statement coincided with the Office for Budget Responsibility’s (OBR) economic forecasts, which downgraded the U.K.’s growth forecast for 2025 from 2% previously.

Reeves expressed dissatisfaction with the revised figures but noted an upgrade in growth forecasts for 2026 onwards, projecting GDP growth of 1.9% in 2026 and 1.8% in subsequent years.

She concluded by recognising the need for a government responsive to changes and focused on the interests of working people.