The 2050 Spring Statement is the annual formal statement delivered by the chancellor on the present state of a nation’s economy within a financial year. The Office for Budget Responsibility, an economic watchdog, in the meantime delivered its updated outlook for the economy — the underpinning of the chancellor’s choices.
The new economic outlook and fiscal duty
The OBR has lowered its prediction for growth in the economy this year to 1% from the previous 2% increase it expected. But forecasts for the subsequent four years have been lifted, now projecting growth of 1.9% next year, 1.8% in 2027, 1.7% in 2028 and 1.8% in 2029. The chancellor said that the OBR has a more positive view of the economy overall in the forecast period than at the previous Budget in October.
Inflation is expected to average 3.2% for the year, an increase from the previous forecast of 2.6%. That is expected to decrease to 2.1% by 2026, though the government’s 2% inflation target is expected to be reached by 2027, the OBR said.
Without policy changes, the government would have missed its rule on spending by £4.1bn, which requires taxes to cover day-to-day spending by 2030, according to the OBR. Any policy direction, including planning regulation and spending reviews, will give a £9.9bn fiscal buffer. Additionally, the chance of the Government remaining within its spending rule has been improved to 54pc, up from 51pc in October. The odds the government will hit its second fiscal rule — which states that public debt must be on the way down as a share of the economy — remain pegged at 51%.
Changes to Welfare Provisions
There were improvements to welfare, particularly with Universal Credit and Personal Independence Payments (PIPs), announced in the Spring Statement. Proposed cut to the health-related part of Universal Credit for new claimants from 6 April 2026 will be implemented as scheduled — reducing from £97 a week to £50 The inflation adjustments for this component, though, will be deferred until after 2030. The health-related component that used to be available to claimants aged 18 to 22 has been removed.
The equivalent weekly health-related payments will be frozen at £97 per week for all existing claimants with Universal Credit until 2030, with an additional top-up payment for those with most severe conditions. By 2030 the standard grant paid under Universal Credit will be £14 per week — just less than the £15 a week initially proposed. In November 2026, eligibility criteria in relation to PIPs will be assessed more strictly
Housing and Construction Sector Initiatives
Reforms to the planning system implemented last year should also support actual building activity, which the OBR estimates will deliver a further 170,000 units of housebuilding over the next five years. These changes are projected to provide a 0.2% boost to the economy by 2030 and a 0.4% boost by 2035.
The funding, worth £625m over four years, is not new though it is intended to supplement, “help kickstart the construction sector in England to address skills shortages and help drive growth, by expanding existing training schemes”.
Fiscal and Efficiency Initiatives Under Public Services Outlay
Public service spending was revised in the Spring Statement, with day-to-day government spending expected to decrease £6.1bn a year by 2030. Real-terms growth in public spending is now forecast at 1.2% rather than (1.3%) after 2026.
The government plans to slash bureaucracy across Whitehall Departments by 15 per cent by 2030. It will probably bring a change and a drop by some 10,000 civil service jobs — primarily in HR, policy advice, communications and office management.
Defence, Overseas Aid and Revenues Measures
Defence spending, already scheduled to increase by £2.9bn next year, will get an additional £2.2bn. The Treasury has announced that doing so would raise military spending to 2.36% of national income next year, a small step toward the government’s target of 2.5% by 2027.
The additional defence cash will be funded by reducing overseas aid from 0.5 per cent of gross national income in 2027 to 0.3 per cent and by tapping Treasury receipts.
The government is planning to hire 400 more staff within HMRC to combat “wealthy offshore non-compliance” and expects to raise £500m extra over five years as a result. A new scheme modelled on a US system will give a share of recovered funds to “informants” who report tax avoidance later this year.
