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The chancellor’s statement is not a formal budget – as Labour pledged to only deliver one per year – but rather an update on the economy and any progress since her fiscal statement last October.
Ms Reeves told MPs “the world has changed” since her first budget just under five months ago, and that was to blame for the string of cuts and downgrades she is outlined in the Commons.
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But critics have said today’s update is a direct consequence of her decisions since taking office in July.
Here are the key takeaways from the spring statement:
The Office for Budget Responsibility (OBR) has halved the UK growth forecast for 2025 from 2% to 1%, Ms Reeves said.
She told the House: “I am not satisfied with these numbers. That is why we on this side of the house are serious about taking the action needed to grow our economy.”
She explained the government “must work closely with the Bank of England” to ensure inflation returns to the target of 2% per year, and touts the three interest rate cuts since Labour came to office.
The OBR now expects output to grow 1% in 2025, by 1.9% next year, 1.8% in 2027, 1.7% in 2028 and by 1.8% in 2029.
Additionally, Ms Reeves said the government’s budget will move from a deficit of £36.1bn in 2025/26 and £13.4bn in 2026/27, to a surplus of £6bn in 2027/28, £7.1bn in 2028/29 and £9.9bn in 2029/30;
The OBR estimates Labour’s cuts to the welfare budget will save £4.8bn, with changes going further than initially thought, Ms Reeves confirmed.
The chancellor said the health element of universal credit will be cut by half and frozen for new claimants and the government is investing in the Department for Work and Pensions to help get people back into work.
She told the House: “The Universal Credit standard allowance will increase from £92 per week in 2025-26 to £106 per week by 2029-30, while the Universal Credit Health element will be cut by 50% and then frozen for new claimants.”
Labour is “investing £1bn to provide guaranteed, personalised employment support to help people back into work”, as well as £400m to “support the Department for Work and Pensions to deliver these reforms effectively and fairly”.
The chancellor pledged to “boost Britain’s defence industry and to make the UK a defence industrial superpower”.
She confirmed the government met its pledge to spend 2.5% of GDP by 2027.
The Ministry of Defence will also get an additional £2.2bn next year, the chancellor said, adding that the investment will support the government’s growth agenda.
She said: “We will spend a minimum of 10% of the Ministry of Defence’s equipment budget on novel technologies including drones and AI [artificial technology] enabled technology.
“Driving forward advanced manufacturing production in places like Glasgow, Derby and Newport, creating demand for highly-skilled engineers and scientists, and delivering new business opportunities for UK tech firms and start-ups.”
Ms Reeves said the statement does not contain any further tax increases, before highlighting work needed to tackle tax evasion.
She told the Commons: “Today, I go further continuing our investment in cutting-edge technology, investing in HMRC’s capacity to crack down on tax avoidance and setting out plans to increase the number of tax fraudsters charged each year by 20%.
“These changes raise a further £1bn taking total revenue raised from reducing tax evasion under this government to £7.5bn.”
She says that reducing tax evasion will raise an extra £1bn for the economy.
On departmental budgets – which dictate how much different parts of government can spend until 2030 – Ms Reeves said she aims to make the state “leaner and more agile”.
She announced a new Transformation Fund which will work on bringing forward £3.25bn of investment to deliver the reforms that she says public services need.
She told the Commons: “Earlier this month, the prime minister set out our plans to abolish the arm’s-length body NHS England and ensure that money goes directly to improving the experience for patients.
“The health secretary is driving forward vital reforms to increase NHS productivity, bearing down on costly agency spend to save money we can improve patient care. And the chancellor of the duchy of lancaster is taking forward work to significantly reduce the costs of running government by 15%, worth £2bn, by the end of the decade.
“This work shows that we can make our state leaner, and more agile, delivering more resources to the front line while ensuring we control day-to-day spending to meet our fiscal rules.”
Ms Reeves turns to house building, and says it has been concluded that the government’s reforms will permanently increase the level of real GDP growth by 0.2% in 2029-30.
She says the OBR has concluded that the government’s reforms will lead to house building reaching a 40-year high but to build these new homes, people with the “right skills” will be needed.
“Earlier this week, the education secretary announced more than £600m to train up to 60,000 more construction workers including ten new technical excellence colleges across every region of the country giving working people the chance to fulfil their potential.”
OBR forecast for living standards: real household disposable income will “now grow this year at almost twice the rate expected in the autumn”, Ms Reeves says.
“Households will be on average over £500 a year better off under this government”.
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