Why cuts and weak growth revealed in Spring Statement only add to Scottish Labour's woes

Anas Sarwar has little over a year to turn things around for his party

The SNP wasted no time in accusing Chancellor Rachel Reeves of ushering in a "new era of austerity" with her Spring Statement.

The party's Westminster leader Stephen Flynn said Labour was “punching down on the poorest”, while Finance Secretary Shona Robison called its welfare cuts “deplorable”.

Scottish Labour leader Anas Sarwar | PA

Some in Labour will agree. The UK government’s own analysis estimates its reforms will push 250,000 more people into relative poverty, including 50,000 children. Those will be hard figures to swallow.

Addressing the Commons on Wednesday, Ms Reeves blamed “increased global uncertainty” as the Office for Budget Responsibility halved its forecast for economic growth in 2025 from 2 per cent to just 1 per cent.

The Chancellor was forced to set out measures totalling around £14 billion, including a series of cuts, to ensure she met her “non-negotiable” goal of balancing day-to-day spending against tax receipts, rather than borrowing.

She confirmed a further squeeze on the welfare budget, with the package expected to save £4.8bn in 2029/30. Elsewhere, higher energy and food prices and “more persistently high wage growth” will cause inflation to hit a peak of 3.7 per cent in the middle of this year.

All of this will only add to Scottish Labour’s woes. The next Holyrood election is a little over a year away, and last year’s general election landslide feels like a lifetime ago.

At an event in Edinburgh on Tuesday evening, Sir John Curtice, the polling guru, outlined the scale of the challenge.

“Unless there is fundamental change to get Labour back to where it was in July, it seems almost inevitable that the SNP is going to be the core of the next government," he said.

Anas Sarwar, the Scottish Labour leader, has an uphill battle to turn things around. UK government decisions over winter fuel payments and National Insurance have made his life harder, and weak economic growth and benefit cuts will not help matters.

Welfare reform is not necessarily unpopular with the public, but it has already led to internal divisions within Labour. Former MSP Neil Findlay quit the party last week over the row.

It also hands ammunition to the SNP to attack Labour from the left. Ms Robison accused the UK government of “trying to balance its books on the backs of disabled people”.

A £2.2bn boost for defence spending will benefit firms in Scotland, but the wider mood music is not particularly positive, and that is a problem for Mr Sarwar. Then there is the impact on the Scottish Government’s own budget.

The respected Fraser of Allander Institute at Strathclyde University highlighted an extra £28 million for the Scottish Government in 2025/26 due to a small increase in departmental spending at UK government level.

However, the picture is “significantly more challenging” in future years, with cuts in UK departmental budgets and welfare changes both having an impact.

“Put together, and in the absence of any other changes, the Scottish Budget would be around £900m worse off on the current side in 2029/30 than previously projected,” it said.

Expect the SNP to make hay with that.