Rachel Reeves is set to deliver her spring statement today, warning that spending cuts are inevitable because “the world has changed” and borrowing costs are rising. Though the Office for Budget Responsibility (OBR) has just made her job even harder, by coming up with different sums to the government, again…
The OBR is now expected to slash its 2025 growth forecast by up to half, down from the 2% it naively predicted in October. On top of that, last week’s welfare reforms, which the government claimed would save £5 billion, are now projected by the OBR to save just £3.4 billion which includes an extra £500 million Reeves is cutting from benefits. That leaves a £1.6 billion shortfall. Defence secretary John Healey confirmed to Times Radio this morning that Reeves is now scrambling to plug the hole:
“That’s a calculation we may see confirmed from the OBR… Doing nothing is not an option, it’s failing and writing off a young generation.”
Meanwhile, government borrowing for the year to February hit £10.7 billion, way above the £6.5 billion forecast – piling yet more pressure on Reeves. OBR chairman Richard Hughes admitted last year that their forecasts are basically “a work of fiction.” Reeves will be regretting tying the Treasury to a forecaster that’s misjudged UK borrowing by £53 billion a year since its creation…
UPDATE: Reeves confirms the OBR slashed its growth forecast for 2025-26 in half from 2% at the Budget to 1% now. Predicted productivity levels are now more than 1% lower…
Kemi Badenoch at the 1922-ConHome bash last night:
“I did praise [Burnham] for his stamina, it was amazing. All I had to do was sit back and lie there. I didn’t have to do anything at all…”