Chancellor Rachel Reeves delivering her Spring Statement in the Commons today. Courtesy: BBC
Chancellor Rachel Reeves told MPs today that GDP growth should pick up to 1.9% next year but said that the forecast for GDP growth this year has been halved by the OBR from 2% to 1%.
She told the Commons today, in her Spring Statement, that the economy was facing global economic challenges and uncertainty but she was taking steps to promote economic growth which would pay off longer term.
Despite her upbeat forecasts some experts have suggested that today's figures make a UK recession more likely. Shadow Chancellor Mel Stride, responding in the Commons, accused her of “tanking” the economy.
Ms Reeves told MPs that thanks to her policies, including encouraging more house building, GDP growth should resume next year despite poor growth figures this year.
She said the Office of Budget Responsibility had forecast GDP growth of 1% in 2025, 1.9% in 2026, 1.8% in 2027, 1.7% in 2028 and 1.8% in 2029. She suggested that the OBR updated forecasts for the next four years were a vote of confidence in her policies.
She announced more support for house building, a streamlined planning process and significantly more spending for defence with a promise to increase defence spending to 2.5% of GDP and eventually 3%.
She said the OBR had forecast that households would be £500 better of this year as a result of changes she made in the Budget.
As widely expected in her statement there were no significant changes to taxation or pensions and investment although she did promise a crackdown on tax evasion.
The Chancellor was pleased with better news on inflation this morning with CPI falling in February to 2.8% from 3% in January. She said she believed the Bank of England’s 2% target on CPI inflation target will be reached by 2027.
One unexpected announcement was a freeze on some benefit claimants.
Amid an expected cut in welfare benefits by £4.8bn, she added that the Universal Credit Health element will be cut by 50% and then frozen for new claimants - a move that caught some experts by surprise. She said that with rising welfare costs more had to be done to bring costs under control and encourage more people into work.
