Benefits cuts and more cash for defence: Everything we know about Rachel Reeves' Spring Statement
26 March 2025, 09:01 | Updated: 26 March 2025, 12:56
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It's not a full fat Budget, so today's financial statement from the Chancellor won't be business as usual.
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No holding up the red box outside No11 Downing Street, no rabbit out of the hat.
No huge tax rises last like November, or big spending splurges either.
And after the mini-Budget fiasco spooked the markets so much, it's fair to say that the Treasury don't like surprising the public, or Westminster, anymore.
Therefore, we know most of what she'll already say today already.
That being said, it's not hyperbole to say that stakes for Rachel Reeves are incredibly high.
After a budget which borrowed more, raised taxes again, and upset businesses and farmers, but failed to create the promised growth, she needs to deliver those green shoots of recovery and hope for the economy.
It might not be a major fiscal event in Treasury terms, but for a government who are trying to throw the book at creating growth, it'll still be a big moment.
So what will be in it, and what does it mean for us?
'The world has changed'
That'll be the message from the Chancellor as she stands up at 12.30 today - and that bluntly means Donald Trump's re-election to the White House.
It means possible tariffs which may hit our economy in a matter of weeks, which the government are desperately trying to strike a deal to avoid.
Will the financial chiefs take this into consideration, and what could that mean for jobs, and for our economy, which is already struggling?
And it means we need to scramble now to get more cash into our defence industry, to plug any holes left by the US, and appease a volatile President.
We should get more details today on how the government will pay to get us up to 2.5 per cent of GDP spent on defence - those cuts to foreign aid - and beyond.
Will it be enough to inject a much-needed lifeline into our 'hollowed out' armed forces? Many are sceptical.
Gloomy economic figures
The main business today will be an update on the economy - and it ain't looking great.
A government source told me last month they were throwing everything at the Office for Responsibility in the weeks running up to the Budget to try and get them to tick their forecasts up.
The Heathrow speech, binning the regulators, and slashing the red tape with a bonfire of planning rules.
So far, the reports suggest that may not have worked, with forecasts expected to be halved this year. That would be a disaster for a Chancellor who is already feeling the heat, and who promised to go for growth above everything else.
We'll find out soon.
There was a little reprieve this morning as inflation ticked down - will that last?
And will the Bank of England continue to cut interest rates this year, delivering much-needed relief for households? Stay tuned.
Cuts to welfare and Whitehall to plug the gaps
We know that around £15billion will be needed to plug the holes in the public finances - that exists again thanks to higher than expected borrowing, and lower growth bringing in less cash for the Treasury.
That'll be paid for with the welfare squeeze announced last week - which were thought to save £5billion, but may end up being less.
That may force even deeper cuts to benefits to plug the gap - news which will be greeted poorly by already grumpy Labour MPs.
What will the impact be on the ballooning benefits bill - will it save money down the line or not touch the sides?
We'll also see the scale of what the cuts to the civil service will look like, and whether the efficiencies of Artificial Intelligence will generate a few more pennies for the pot.
MPs will be looking carefully at the devil in this detail before they decide whether they can back what are being painted as very anti-Labour measures.
Some I've been speaking to from even the moderate wings of the party are unhappy with the plans they've seen so far.
There could be a proper rebellion on their hands if they don't get this balance right.
Defence Secretary joins Nick Ferrari ahead of the Chancellor's Spring Statement | Watch in full
Boost for social housing
In a bid to sweeten the deal, the PM and Housing Secretary announced a new £2billion for 18,000 social and affordable homes.
That would be music to ears of the potential benefits rebels.
There's also another £600million to help train 60,000 more engineers, brickies, sparkies, chippies by 2029.
Will that stop employers from reaching for the lever of immigration from overseas, and help pull people into work here?
The Chancellor will be hoping so.
Firing gun on the spending review
The Chancellor will kick off the spending review of all government departments, and how much cash they will get over the next two years.
That's expected to be tighter than thought as a result of the current fiscal hole.
Previously she slammed Tory plans to cut the amount of cash departments would get.
But unless she can develop that promised growth, she might have no choice in a bid to balance the books.
She's tightly boxed herself in with promises not to raise VAT, income tax or National Insurance on working families.
That'll leave her looking to make cuts wherever she can, rather than a direct raid on our wallets.
MPs are increasingly worried about the spending envelope of cash they'll get - which will be revealed in June.
One minister said they fear it means cuts to "vital public services" that the public and MPs just won't back it.
We'll get a flavour of how far and fast that might be, later today.
Fiscal rules - here to stay?
The whole reason the Chancellor's having to find savings is because of her own fiscal rules - promising to get debt falling and not to borrow for day to day spending.
A good thing to get Labour's economic credibility in the black before the election, it's now narrowing her choices significantly.
MPs and leading figures have called on her to put them in the bin, or tweak them again. After all, the world's changed...
She said this morning those rules are here to stay and she won't play fast and loose with the finances.
The markets will be pleased to hear that.
But Reeves might regret that decision come the November Budget.
Some small tax tweaks
As LBC's revealed already, the Chancellor will reveal today a few new policies which will hopefully make life easier for those of us who suffer with the tax return.
Parents hit by the High Income Benefit Charge won't have to fill one in from the summer, and those with side hustles like dog walking or selling clothes on Vinted will have the threshold for filing one raised.
It's aimed to simplify the system, spark a little more growth and be a voter-friendly sweetener - without spending any cash.
I imagine we could see a few low-cost ideas to try and boost the economy.
But I don't think it'll touch the sides with voters hoping for a rabbit from the Chancellor's hat.
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Ones to watch
I'll be keeping a beady eye out for the income tax brackets - which Rachel Reeves has previously promised to unfreeze.
It's a lot of cash for her to spend to do that, of which she doesn't have any spare right now.
It's been rumoured there may be huge cuts to ISA allowances - the amount that can be saved tax free every year. Will it be cut from £20,000 a year to as low as £4,000, hitting savers in the pocket to rake in a few million?
The 'nom-dom' crackdown announced last year has been watered down by the Treasury by phasing it in slower.
What will that look like, and will it still raise the money they claimed it would?
And will there be any relief for the farmers, whose tractors have been parading down Whitehall for months? Unlikely, but possible.
Awful April is coming - with a National Insurance hike, more air passenger duty, and business rates discounts ending.
The minimum wage hike will offset a little of this for workers, but not enough.
Will there be any help for businesses warning of mass job-losses?
Will hospices be exempt from the National Insurance hike?
The stamp duty holiday will also be over for millions of first-time buyers - and a slowdown of the market could follow.
If Rachel Reeves wants to loosen up the economy, the housing market is always a good place to start.
Is there anything she can do without loosening the purse-strings there?
As ever, when the Chancellor stands up, she'll be trying her best to paint a rosy picture of the sunlit uplands on the horizon.
But we'll be pouring over the red books to see whether she's really able to fix those holes in the public finances - or we're just papering over the cracks.
