Spring Budget 2025 RECAP: Chancellor Rachel Reeves outlines spending cuts in Spring Statement
Chancellor Rachel Reeves is due to set out her spring statement in the House of Commons from about 12.30pm.
We already know she is planning to cut £5 billion from the welfare budget in a bid to increase defence spending.
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The UK government has pledged to increase defence spending from 2.3 per cent of GDP to 2.5 per cent, costing around £16bn.
The Labour government has also said it will cut welfare spending by tightening up the eligibility criteria for disability benefits.
In Scotland, the SNP has already heavily criticised the proposed spending cuts.
Follow along live.
Spring Statement 2025 LIVE: Chancellor Rachel Reeves outlines spending cuts and defence plans as Scotland waits
Key Events
- Chancellor Rachel Reeves is due to give her spring statement at lunchtime in the House of Commons
- Around £5 billion is expected to be cut from the welfare budget
- The UK Government has vowed to increase defence spending as geopolitical tensions rise
Hello and welcome to The Scotsman’s live blog!
I’m Rachel Amery, the paper’s political correspondent and I’ll be with you throughout the day to bring you all the latest on Chancellor Rachel Reeves’s spring statement.
Our Westminster Correspondent Alexander Brown will be in the House of Commons to watch the statement, and our Political Editor Alistair Grant and Deputy Political Editor David Bol will be able to bring you all the latest from Holyrood on how it affects Scotland.
Our finance and business specialists will also be covering today’s proceedings.
What are we expecting from the spring statement?
Chancellor Rachel Reeves will deliver her spring statement in the House of Commons at around 12.30pm this afternoon.
It will be immediately after Sir Keir Starmer faces the weekly prime minister’s questions.
This is not a formal budget, rather an update on the economy, but it is still expected to include sweeping cuts to plug the black hole in the public finances.
Any decisions that are made on areas that are devolved to Holyrood could still affect Scotland, as it could impact on how much cash goes the Scottish Government’s way to pay for things.
Both the Office for Budget Responsibility and the Fraser of Allander Institute at Strathclyde University are due to publish their analyses of the spring statement as well.
We already know the axe is going to fall hard on welfare after the UK Work and Pensions Secretary Liz Kendall announced £5 billion is to be cut from this department.
This will mostly happen by tightening up the eligibility criteria for personal independence payments, also known as PIP.
This payment is devolved in Scotland and most now receive the adult disability benefit instead.
On the one hand this means the eligibility criteria might not change north of the border, but the cash coming the Scottish Government’s way to pay for it might.
Defence spending
This is a government department that might get a lot of airtime in the chancellor’s statement.
Earlier this year, Prime Minister Sir Keir Starmer announced his government will be increasing defence spending from 2.3 per cent of GDP to 2.5 per cent, costing around £16 billion.
Some of the cash for this is coming from cuts to the international aid budget, but some of it is coming from the cuts to welfare spending.
Keep an eye out for energy
Any announcements on net zero, oil and gas or renewables will undoubtedly have a big impact on Scotland.
One thing to keep an eye on is carbon capture and storage.
The Acorn carbon capture and storage near Peterhead missed out on the vital UK Government funding it needed to get off the ground during the last round of funding grants.
At the time, the government vowed Acorn was the next in line to get cash, but Offshore Energies UK is worried the English carbon capture projects have consumed all the money.
Anything else to keep an eye out for?
Civil servants in Scotland might be affected - the chancellor has vowed to cut government running costs by 15 per cent by the end of the decade, with savings coming mainly from back office and administrative roles rather than frontline services.
Trade unions are warning this could cost up to 10,000 jobs, including in the Scotland Office or parts of the energy and defence departments which are in Scotland.
There are also reports that universal free school meals will end and school spending will be cut by £500 million.
The UK Government disputes this, and although education is devolved the SNP is already panicking that such a move could squeeze the Scottish Government’s budget.
New inflation figures
New figures show inflation is lower than expected for February at 2.8 per cent - analysts had expected inflation to be 2.9 per cent.
This is down from the 3 per cent recorded in January, but remains above the Bank of England’s target of 2 per cent.
The Bank of England expects inflation to rise temporarily to 3.7 per cent later this year due to higher energy prices.
Inflation is the pace of price rises over certain periods of time and is given as a percentage - most notably people will see this impacting on food and energy prices.
The new inflation figures are way down from the peak of 19 per cent recorded in March and April 2023.
Earlier this morning Treasury Minister Darren Jones responded to the inflation rate falling to 2.8 per cent, saying his government is focused on economic growth and stability.
He said: “Our number one mission is kickstarting growth to raise living standards for working people - that is why we are protecting working people’s payslips from higher taxes.
“In a changing world, we’re focused on delivering economic stability to secure people’s finances - freezing fuel duty, protecting the triple lock and increasing the national living wage by £1,400 a year for full time workers, while going further and faster to drive growth through our plan for change.”
When the chancellor makes her statement in around an hour’s time, she is expected to say independent forecasters are downgrading their growth expectations for this year from 2 per cent to 1 per cent, as other economists have done.
She is likely to put this down to geopolitical instability.
This could have a direct impact on families as her October budget forecast people would be £500 better off after inflation by 2030 - it could now be smaller on the back of this.
Earlier this morning opposition parties criticised Labour amid the falling inflation figures.
The Conservatives say the UK Government’s choices are “saddling the country with higher inflation for longer”, with Shadow Chancellor Mel Stride saying: “We left Labour with inflation bang on target.
“[Unless Rachel] Reeves takes urgent action at her emergency budget today, working families will continue to pay the price.”
The Lib Dems say the inflation figure “will be of no comfort to the millions of families across the country who are struggling”, with the party’s Treasury spokeswoman Daisy Cooper adding: “It is time for the government to fix the mess they made in the autumn budget and deliver a real plan for growth to finally get our economy growing.”
A slight hiccup in the chancellor’s plans for the day.
Last night the Office for Budget Responsibility, the independent body inspecting the Treasury’s spending plans, disputed the UK Government’s estimates on how much money they will save by cutting welfare.
Previously ministers said the cuts would save them £5 billion, but the Office for Budget Responsibility puts the estimate well below this, at just £3.4bn.
An increase to onshore GDP
Deputy First Minister Kate Forbes has reacted to the 0.3 per cent increase in onshore GDP for January.
She said: “In the three months to January, GDP is now estimated to have grown by 0.5 per cent compared to the previous three month period.
“This is a strong start to the year for the Scottish economy, particularly in the context of global economic uncertainty.
“Many of the levers needed to deal with our economy lie with the UK Government.
“In particular, the UK Government must provide swift clarity on how today’s spring statement, including its profoundly concerning planned cuts to welfare, will impact Scotland’s economy and budget.
“I am focused on delivering economic growth with the limited powers the Scottish Government holds, and creating an investor-friendly environment.
“Already this year we have seen significant investments in a subsea cable manufacturer at Hunterston and new port infrastructure from Scapa to Montrose, and we are laser-focused on unlocking new private investment in the country’s rapidly growing offshore wind industry.”
Check out some of our pre-spring statement coverage
Keir Starmer 'not a liability'
Some news from Edinburgh last night - Dame Jackie Baillie MSP, Scottish Labour’s deputy leader, says Prime Minister Sir Keir Starmer is “not a liability” to her party’s Holyrood election chances.
Scottish Labour is plummeting in the Holyrood polls ahead of next year’s Scottish elections, as more and more unpopular decisions are made by the UK Government in Westminster.
Let’s see if she changes her tune after hearing the chancellor’s spring statement.
'Inevitable' SNP at the core of the next Scottish Government
Another new story this morning - polling guru Professor Sir John Curtice says it is “inevitable” the SNP will be at the core of the next Scottish Government.
As Scottish Labour continues to slip in the Holyrood polling, and as John Swinney recovers the SNP’s fortunes, it looks more and more likely that there will be a pro-independence majority elected to the Scottish Parliament in 2026.
PMQs gets underway
PMQs has got underway in the House of Commons and Prime Minister Sir Keir Starmer is wasting no time in previewing the spring statement.
He said: “The spring statement will showcase a government going further and fast than ever.
“We are investing £2 million on 18,000 affordable homes for working families, 60,000 young people trained, fixing millions of potholes, undoing a decade of stagnation, jobs and opportunities and securing Britain’s future.”
Leader of the Opposition Kemi Badenoch has branded the spring statement an “emergency budget”.
She said: “In half an hour we will hear the chancellor’s emergency budget - even the home secretary’s husband is calling it an emergency budget as she scrambles to fix the mess she made last October.”
However Ms Badenoch’s questioning is going to focus on banning mobile phones in schools.
Sir Keir Starmer says this is “completely unnecessary”.
Kemi Badenoch says the Prime Minister does not care about discipline in schools.
The Prime Minister says under the Conservatives, a third of children started schools without appropriate development markers being met, a quarter left primary school without reading and maths, and one in five pupils are regularly absent from schools.
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