Billions of pounds in spending cuts – including welfare – expected in spring statement
The Treasury will put forward the proposed cuts to the Office of Budget Responsibility (OBR) on Wednesday, ahead of it providing a financial forecast on 26 March, alongside Chancellor Rachel Reeves announcing her spring statement.
Sky’s deputy political editor Sam Coates revealed on the Politics at Jack and Sam’s podcast that welfare cuts are set to be part of the spring statement package to help the chancellor come within her borrowing limit.
Coates said there would be a “four-point plan” involving planning reform, Whitehall cuts, regulation cuts and welfare cuts.
Ms Reeves is running out of her £9.9bn headroom after months of economic downturn and geopolitical events since last October’s budget.
Her self-imposed fiscal rules mean she cannot borrow for day-to-day spending, leaving spending cuts as one of her only options.
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Over the weekend, Sir Keir Starmer said the government was in the “early stages” of looking at whether tax rises or spending cuts were needed to meet Labour’s self-imposed fiscal rules.
The prime minister refused to say whether further tax rises or spending cuts would be imposed.
The OBR is required to produce two economic forecasts a year, but the chancellor said she would only give one budget a year to provide stability and certainty on upcoming tax changes.
However, the poor economic climate since October is forcing her hand, with inflation rising to its highest level in 10 months to 3%, a sharp rise in government bond yields and growth has not been as high as expected.
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