Rachel Reeves delivered her much-anticipated Spring Statement on 26 March 2025, setting out plans to balance the books while tackling sluggish growth and rising fiscal pressures. As expected, the reaction has been swift and divided, reflecting the challenge of navigating economic responsibility in an election year.
The statement outlined a bleak economic outlook, with the UK’s growth forecast for 2025 halved from 2% to just 1%. In response, Reeves announced £14 billion in spending cuts, targeting welfare budgets and government departments. She framed these cuts as a necessary correction to secure a projected budget surplus by 2029-30. Simultaneously, she pledged a significant increase in defence spending, citing growing global instability.
Critics from across the political spectrum didn’t hold back. The opposition branded the revised forecasts and spending cuts as a broken promise, accusing the government of leaving the country “weaker and poorer.” Even some within Reeves’s own party raised eyebrows, particularly over the welfare cuts, which are expected to hit over three million households and push around 250,000 people into poverty. Detractors questioned the wisdom of cutting support at a time when many are still feeling the effects of the cost-of-living crisis.
Think tanks and economists added their own critiques. Some argued that Reeves’s plan was fiscally responsible but came at a high social cost. Others pointed out that the “headroom” in public finances is based on optimistic assumptions, and that tax rises may still be on the table come the autumn Budget. Meanwhile, concerns were raised that pushing through rapid welfare changes might have unintended consequences for the lowest income families.
The business community also expressed concern, particularly about the lack of support as firms face higher national insurance contributions and a rise in the national living wage from April. Business leaders warned that these pressures could lead to higher prices, reduced hiring, and stalled investment.
Among the public, reactions have been predictably varied. Some see the statement as a necessary dose of reality, while others feel let down by the prioritisation of defence spending over essential services and household support.
With a general election looming, the Spring Statement has set the stage for further debate. Reeves is banking on her tough choices being seen as prudent. Whether the public agrees remains to be seen.