What time is the Spring Statement, and what will be in Rachel Reeves' update on the British economy?

26 March 2025, 08:36 | Updated: 26 March 2025, 08:51

Rachel Reeves is set to give her Spring Statement on Wednesday, updating the UK and the financial markets on her plans for the British economy.

The Chancellor comes into Wednesday's statement under something of a cloud, with fears that the Budget she announced last October has not given her the headroom she thought.

Fiscal watchdog the Office for Budget Responsibility is expected to cut the UK's growth forecast for this year to 1%, down from its 2% prediction in October.

Reeves is also under pressure to increase defence spending with the US moving towards winding down its military commitment in NATO.

The Chancellor has been left scrambling for savings to help balance the nation's books without hiking taxes further.

For all the latest on the Chancellor's Spring Statement listen to LBC on Wednesday from 7am on Global Player

Defence Secretary joins Nick Ferrari ahead of the Chancellor's Spring Statement | Watch in full

What is the Spring Statement?

The Spring Statement is a way for the Chancellor to provide the people of the UK on the economy, public finances, and how the government is making progress on its economic goals.

It comes roughly five months after Ms Reeves' first Budget, which took place at the end of October last year.

Billions of pounds in spending cuts expected in the Spring Statement

When is the Spring Statement?

Ms Reeves will give her Spring Statement at about 12.30pm on Wednesday.

She will address MPs in the House of Commons, presenting the main findings in the Office for Budget Responsibility (OBR)' assessment of the economy.

Her statement will follow immediately after Prime Minister's Questions.

It will be followed by a response from the Conservatives.

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Economic growth downgrade

Ms Reeves's Spring Statement will be accompanied by a more detailed forecast from the OBR, followed by a press conference by its head, Richard Hughes to give a more in-depth look at its findings.

The OBR is expected to slash its growth forecast for the UK from 2% to 1%, similar to the Bank of England and OECD earlier this year.

Less 'headroom' than expected

The OBR is also said to have warned that cuts to welfare set out in recent weeks have fallen short of the £5 billion savings ministers expected, leaving the Chancellor with a £1.6 billion hole likely to be filled with further cuts.

The government has also borrowed more than previously expected, with the cost of those loans rising - in part due to global turbulence.

The latest official borrowing figures, for February, were £4.2 billion higher than had been forecast by the OBR.

Ms Reeves' self-imposed rule to meet day-to-day spending at the end of the five-year forecast through receipts rather than borrowing was forecast to be met with £9.9 billion of headroom to spare in the OBR's October assessment.

But the lack of growth and the increased cost of borrowing will eat into that headroom, forcing the Chancellor to take action to ensure she continues to meet the rule - which is designed to show that Labour can be trusted with the public finances.

What will be in the Spring Statement?

Reeves is unlikely to make many major announcements - this will be a more minor update than the Budget.

Spending cuts

The government has already announced cuts to benefits spending meant to reduce outgoings by £5 billion - and may now have to go even further.

That may include freezing Universal Credit incapacity benefits for new claimants until 2030, rather than having them rise with inflation. The basic rate of Universal Credit may also be halved in 2029.

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Defence spending

The Chancellor will promise to increase defence spending by £2.2 billion from April, as part of the previously announced plan for the biggest boost in military funding since the Cold War.

Ms Reeves will tell MPs that a "more insecure world" means the government needs to put a greater focus on national security.

She will say: "This moment demands an active government stepping up to secure Britain's future. A government on the side of working people.

"To grasp the opportunities that we now have and help Britain reach its full potential, we need to go further and faster to kickstart growth, protect national security and make people better off through our plan for change."

Additionally, Ms Reeves is expected to announce £400 million for the government's new UK Defence Investment body to "harness UK ingenuity and boost military technology".

The Chancellor is also expected to explain how the foreign aid budget that has been reallocated to defence will be spent in more detail.

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Other changes

Reeves has also faced calls to freeze income tax thresholds beyond the current window, which currently ends in April 2028.

Some have urged her to reduce the cash ISA tax-free limit from £20,000 to £4,000 to encourage people to invest in the stock market.

What has already been announced?

Ms Reeves has announced £2 billion of cuts the civil service - with around 10,000 jobs expected to be lost.

She has pledged £2 billion of funding for social and affordable homes in England.

The Chancellor has also promised to train tens of thousands of construction workers to help deliver the promised 1.5 million new homes in England before the next election.