Spring Statement stay updates: Rachel Reeves to unveil brutal welfare cuts as ballot reveals damning verdict on Labour’s dealing with of economic system

Seemingly insprired by the Trump administration’s inadvertent gaffe of adding a journalist into a group containing classified information, the Tories have taken aim at Rachel Reeves ahead of what they describe as her ’emergency budget’.

A damaging poll released on the eve of the Spring Statement reveals most voters no longer believe the Chancellor’s economic claims – and are increasingly blaming her for the country’s financial woes.

The More in Common survey found Ms Reeves is facing a credibility crisis, with more than half of voters (53 per cent) saying Labour lied about its economic plans to win power and ‘always knew they weren’t going to keep to these promises’.

Just 13 per cent say Labour has stuck to its pledges on the economy.

Voters are also tired of Labour’s constant attempts to blame the last Conservative government, with only 30 per cent saying they believe the Chancellor has been honest about the scale of the fiscal challenge she inherited.

More than half of voters think Labour is spending too much time blaming the Tories. Some 31 per cent now blame Labour for Britain’s growth crisis, compared with 27 per cent blaming the Conservatives and 18 per cent citing global events.

Remarkably, a majority of voters would now rather have former chancellor Jeremy Hunt or Shadow Chancellor Mel Stride at the Treasury.

Voters also fear Ms Reeves will fail in her stated ambition to turn around the economy and deliver a decade of renewal.

With tax rises and increases in utility bills set to come in next month, 49 per cent think the cost of living crisis may never end.

Sir Keir Starmer and Rachel Reeves have both emphasised a ‘changing world’ ahead of the Spring Statement on what is predicted to be a difficult day for the Government.

In statements on X this morning, the Prime Minister wrote: ‘In an era of global change, we will deliver security for working people and renewal for Britain.’

Before that, Ms Reeves wrote: ‘Security for working people and renewal for our country. That is our mission. And in a changing world we will deliver.’

Last night, she tried to blame global challenges for the British economy’s stuttering performance on her watch.

‘We can see that the world is changing, and part of that change is increases globally in the cost of government borrowing – and Britain has not been immune from those challenges,’ she added.

In a relief to Rachel Reeves ahead of her Spring Statement, headline CPI dipped to 2.8 per cent in February from 3 per cent in January.

That was slightly better than the 2.9 per cent analysts had pencilled in – although still well above the Bank of England’s 2 per cent target.

Closely-watched core inflation – excluding energy, food, alcohol and tobacco – also nudged down from an annual rate of 3.7 per cent to 3.5 per cent.

The Pound immediately slid against the US dollar, as traders priced in a higher chance of the Bank reducing the base rate at its next meeting in May.

The level was kept on hold at 4.5 per cent last week despite mounting alarm at the slowdown in the economy.

However, some economists warned that the data could be a ‘false dawn’ and planned hikes in energy and national insurance for firms will push inflation ‘perilously close to 4 per cent sooner rather than later’.

by Angharad Carrick

The Chancellor committed to a new set of fiscal rules, which restrict how much the Treasury can spend and tax.

It means the current budget should be on course to be in balance or surplus by 2029/30; net financial debt should fall in the same tax year; and some types of welfare spending will be capped.

After the Budget, she left around £10billion of headroom against the rules, which was below the OBR’s forecast of around £15billion.

Since then, geopolitical issues and rising gilt yields have brought Reeves’ fiscal rules into sharp focus and she has much less room to play with.

Last month, government borrowing was much higher than expected. OBR figures show it came in at £10.7billion, higher than the forecast £6.5 billion, leaving the Chancellor with much less headroom than anticipated.

ING economists predict the Treasury has likely lost all of its headroom following the increase in borrowing costs, but spending cuts will help to meet fiscal rules.

Meanwhile, inflation and gilt yields – the interest paid on new debt – have both increased. Some experts now predict that the Bank of England will choose to keep rates higher for longer than anticipated to combat higher inflation, which is above the central bank’s 2 per cent target again.

All of this will make government borrowing a lot more expensive and therefore harder for Reeves to keep to her fiscal rules.

Rachel Reeves will put the finishing touches to her Spring Statement inside Number 11 this morning before she heads to the Commons this afternoon to deliver it.

The Chancellor will step forward at the despatch box at 12:30pm after Prime Minister’s Questions which starts at noon.

At 2:30pm, the Office for Budget Responsibility (OBR) will hold a press conference where it is expected growth forecasts may be slashed in half to around 1 per cent this year, as well as warning that living standards will stagnate for the rest of the decade.

Then at 4:15pm, Reeves will host a press conference in Downing Street to explain her statement in more detail and take questions.

We will bring you the latest updates throughout the day plus reaction and analysis.

Defence Secretary John Healey has said Rachel Reeves would deliver a ‘tough’ statement ‘in tough times’ as he appeared to confirm that further cuts to welfare spending will be required .

The Chancellor is expected to announce further welfare cuts after promising a £2.2 billion boost to defence spending which has caused upset among Labour MPs and supporters.

Asked how Labour voters would view her Spring Statement, Mr Healey told BBC Radio 4’s Today programme:

It will be a tough, strong statement in tough times. The Chancellor will set out this afternoon that the world is changing, our task is to secure Britain’s future and that’s why she is making an extra £2.2 billion available for defence.

The Office for Budget Responsibility is reported to have concluded the measures will cut the bill by £3.4 billion, with Rachel Reeves expected to announce further measures to save a further £500 million.

Mr Healey told Times Radio:

That’s a calculation we may see confirmed by the Office for Budget Responsibility about the longer-term savings that our plans to change the welfare system may bring.

Rachel Reeves has suffered a major setback even before her Spring Statement today with the Treasury watchdog rejecting her claims for savings from benefits.

The OBR is said to have batted away the government’s estimate that reforms of work and disability handouts can curb £5billion from costs.

Instead they have been valued at more like £3billion – sparking a frantic last-ditch effort to find more cuts despite mounting fury from Labour MPs. Another £500million is apparently being trimmed from welfare, with the rest from other areas.

In total Ms Reeves is thought to have a £15billion black hole in the finances to fill in her Commons set-piece at lunchtime, after the stalling economy and rising debt servicing costs wreaked havoc with her huge tax-and-spend Autumn Budget plans.

Read more from MailOnline’s Political Editor James Tapsfield here:

The Spring Statement is usually an update on the OBR’s forecasts with no new policy announcements.

However, we’ve already had a string of announcements ahead of Wednesday as Reeves looks to balance the books.

Over the weekend, Reeves told the BBC she had ruled out ‘tax and spend policies’ which means she will not raise taxes or government spending.

Ahead of the statement, the Chancellor has:

• Said the UK has ‘not been immune’ from ‘increases globally in the cost of government borrowing’
• Insisted that ‘economic stability is non-negotiable’ and she will ‘never play fast and loose with the public finances’
• Confirmed plans to tell Whitehall departments to cut administrative budgets by 15%, expected to save £2.2 billion a year by 2029-30
• Announced £2 billion of funding for social and affordable homes in England
• Promised to train tens of thousands of construction workers to help deliver the promised 1.5 million new homes in England before the next election

The Chancellor had committed to holding only one budget a year, in the autumn, with the Spring Statement an update on the economy.

However, the changing economic and geopolitical backdrop means that Reeves’ fiscal headroom has been wiped out.

The Treasury has already announced wide-ranging cuts in a bid to recoup some of the fiscal headroom lost to higher debt interest forecasts.

Read our preview from our This Is Money reporter Angharad Carrick:

Hello and welcome to MailOnline and This Is Money’s live coverage of the Spring Statement as Rachel Reeves unveils spending cuts in an attempt to balance the books.

The beleaguered Chancellor will publish official forecasts this afternoon showing the outlook for economic growth has halved to around 1 per cent.

Following her controversial tax-raising Budget in October, the Office for Budget Responsibility (OBR) is also expected to warn living standards are set to stagnate for the rest of the decade.

The gloomy forecasts put Ms Reeves on course to break her own ‘fiscal rules’ and unveil £15billion in cuts, triggering a Labour backlash over whether she is pursuing austerity.

Stick with us as we bring you the latest news, reaction and analysis from our reporters in Westminster and the This Is Money team.