Economic growth forecasts cut in half

Coinciding with the Chancellor’s Spring Statement, the government’s independent forecaster said the economic outlook was “more challenging” and “more uncertain” than when it made its two percent prediction during last year’s October budget.

Reflecting on the downgrade, Rachel Reeves told MPs in Parliament: “I am not satisfied with these numbers.”

However, she went on to tell the Commons that the OBR’s forecasts for next year and beyond indicate that “people will be, on average, over £500 a year better off under this Labour government.”

During her statement, the Chancellor confirmed a number of policies already announced or trailed over the past few weeks – including reforms to the welfare system.

That said, her decision to freeze health-related Universal Credit for new claimants – which was already due to be cut from £97 to £50 a week in April 2026 – came as something of a surprise.

She also confirmed that government departments will have their budgets tightened, with day-to-day spending being cut by £6.1bn in 2029-30, and overall government spending now growing by an average of 1.2% a year above inflation.

As for the planning reforms for housebuilding, the Chancellor told the Commons that these changes would generate an extra “£3.4bn to support our public finances and our public services” by 2029-30.

Additionally, she said the OBR believes housebuilding will rise to its highest level in 40 years.

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