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Rachel Reeves announced the package of £ 14 billion to repair British public finances after weak economic growth, and the high loan costs threw a hole in the fiscal position of the country just five months after its first budget.
The Chancellor set a spring statement in which the growth forecast for 2025 decreased from 2 % to 1 % because she said the deputies that she had to take into account the “world that changes before our eyes”.
Most of her statements were given to show how the government's “headroom” would restore – or the fiscal room for the maneuver – from the deficit of 4.4 billion GBP back to £ 9.9 billion, in which it stood during its October budget.
The Chancellor announced that neither taxes nor change in fiscal rules that she was “unheedable”, and added that there were “hard yards” before us.
But in one of the biggest surprises of the day, she would say that, according to the calculations of the Budget Responsibility Office, the British Fiscal Watchdog, the release of the planning rules would increase GDP and tax revenues, which would be borrowed by another 3.4 billion GBP by 2029-2030.
Fig. He added that social security cuts would have a result of a gross savings of 4.8 billion GBP, while cuts on the planned daily expenses of the department would save 3.6 billion GBP.
It is assumed that the measures of observance of taxes by 2029–30 will increase 2.2 billion GBP.
While capital expenditure increases, this does not affect the main fiscal rule of Reeves, which focuses on everyday expenses.
According to the assessment of impacts by the Ministry for Work and Pensions on Wednesday, about 3.2 million people lose financially financially due to social security reforms and on average lose an average of £ 1,720 per year.
About 250,000 people, including 50,000 children, will be pushed into relative poverty.
The spring statement was the Chancellor's response to a new set of forecasts Fig, which estimated its space against its key fiscal rule-that current expenditure must be exported by tax revenues by 2029-30-wearing.
Reeves did not mention Donald Trump on behalf of, but in fact accused the US President for some British suffering and said that the world became more “uncertain” and that business patterns became “more unstable”.
The Fig had stressed the risks and warned that if the global trade dispute was escalated to include a 20 percentage point of the increase in tariffs between the US and the rest of the world, it would smooth Reeves' head against its fiscal goals.
But Reeves also came to the Chamber of Deputies with some clearer news and noted that although the giant in half of the growth forecast for 2025 upgraded its forecast for future years and for the rest of the decade ran about 1.75 %.
The Chancellor confirmed that defense spending will increase to 2.5 % of GDP.
It will probably face a larger test for its autumn budget, where it could be forced to solve long-term pressure on public expenditures-including the possible impact of Trump Trump war. Some Labor MPs believe that it will be forced to raise taxes.
“We can act quickly and definitely in a more uncertain world,” Reeves said as she referred to “increasing global uncertainty”. A large deck of defense expenditure has been marked as an investment that Britain becomes a “defensive industrial superpower”.
Loan costs in the UK dropped after Reeves' statement because the government announced in the coming year of debt revenue of 304 billion GBP, slightly less than a prognosis of 308 billion GBP according to markets.
Ten -year -old gilded yields, which are indirectly to prices, dropped by 0.03 percentage points to 4.79 %, because investors preliminarily welcomed the plans of the Chancellor, which in contrast to the market, which greeted its budget in October.
The pound was a bit changed and on the day of the US dollar traded by 0.4 % lower to $ 1.289.
The spring statement comes before the implementation next month after a significant increase in contributions to the employer's national insurance, announced in Reeves' first budget in October.
About three -quarters of the costs of measures will be transferred to “real wages” workers, Fig. Said on Wednesday and added that most business leaders' surveys point to a substantial reduction in nominal wages.
The rise of national insurance is set to increase 23.8 billion GBP in the fiscal year 2025-26 and increased to 25.7 billion GBP in 2029-30. It comes together with an increase in taxes that have already been carried out, including the deposit of VAT on private school fees that came into force in January.
The Chancellor also also a phase in a number of other measures to raise taxes, including capital revenue tax and inheritance tax on agricultural and business assets.
