Rachel Reeves earmarks billions in welfare cuts ahead of Spring Statement
Prior to the spring statement, the prime minister has cuts on draft spending cuts on welfare and other government departments.
The Treasury Department will hand over the proposed cuts to the government’s official forecaster, the Office of Budget Responsibility (OBR), on Wednesday, as expectations of the prime minister’s financial buffer have been phased out.
Sources say the world has changed since Rachel Reeves’ budget last October.
OBR’s forecasts may disappear due to global factors such as trade tariffs and global factors such as inflation and borrowing costs.
The Treasury Department will inform the OBR of its “major measures” on Wednesday, which will actually change taxes and expenditures to meet the Prime Minister’s rules on self-implementation of borrowing money.
The government has pledged to drop debt as economic share during parliament, and borrow only to fund investments rather than cover daily expenditures.
Most governments have established such rules in wealthy countries, aiming to maintain the credibility of financial markets. Reeves repeatedly said that her rules were “not negotiable.”
The spending cuts drafted by the Treasury will help bridge the gap that has emerged in recent months, ahead of OBR’s announcement of its forecast and Reeves’ statement on March 26.
Insiders expect the “politically painful” new welfare cuts aim to reduce the massive increase in health-related benefits, which will be outlined in the speech of upcoming Minister for Work and Pensions Liz Kendall.
The Treasury blames global economic policy and geopolitical uncertainty to increase government borrowing costs.
This week, U.S. President Donald Trump imposed tariffs on his three largest trading partners: Canada, Mexico and China. Trump says Britain can avoid border taxesbut Reeves told the BBC on Tuesday that even if the UK is not hit by tariffs, the global trade war will lower growth and increase inflation.
Uncertainty in the Ukrainian war also remains, with Britain deciding to increase defense spending by cutting international aid.
A government insider told the BBC: “Obviously, the world has changed a lot since the fall budget. People are watching this change happen before their eyes.
“The Office of Budget Responsibility will reflect the forecasted world later this month, and a changing world will be the core feature of the Prime Minister’s response later this month.”
It is understood that the euro zone economy is stagnant and the lower UK productivity figures have affected the OBR forecast.
But the impact on Reeves’ previously announced taxes on businesses has also attracted attention, which will have an impact on the UK economy in April.
The company warns that higher taxes may be passed on by increasing the price of customers. Inflation is a measure used to give general images of how the cost of living changes over the year and will increase in the next few months It has been hit with the increase in energy, water and council tax laws, etc.
As the spring statement goes on, Cabinet Office Secretary Pat McFadden and Health Secretary Wes Streeting will also outline the massive drivers of efficiency in civil servants, which they hope will result in substantial numbers and cost savings.
The Prime Minister will argue that the government will always “repair welfare to get people back to work” and “make the NHS more productive”.
An insider told the BBC: “Alumni or no headroom, the Prime Minister is determined to work on change, we need to make the UK safer and more prosperous, and the entire government has made this argument in the coming weeks.”
