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Rachel Reeves announced a package of 14 billion pounds Sterling to repair British public finances after low economic growth and high borrowing costs reached the budgetary position of the country only five months after its first budget in October.
The social cuts will save a net of 3.4 billion pounds sterling, according to the modeling by the Budget responsibility office, said Reeves, while it aims to respect its tax rules, which it described at the start of its declaration as “non -negotiable”.
She also announced reductions in daily ministerial expenses of 3.6 billion pounds sterling by 2029-30.
The Chancellor added that because of her changes, the government’s “margin” – her finance room for maneuver – would reach 9.9 billion pounds sterling in 2029-30, the same level as scheduled in October.
Tax compliance measures should also increase 2.2 billion pounds sterling by 2029-30, while an expected increase in the GDP of planning reforms should reduce the loan by 3.4 billion pounds at that time.
Although capital expenses should increase, this does not affect the main budgetary rule of Reeves, which focuses on daily expenses.
The Printemps Declaration is a response to a new set of OBR forecasts, the United Kingdom’s tax guard dog, which, according to Reeves, had put 4.1 billion pounds in red against his tax rule. She added that the OBR had revised its growth forecasts from 2025 to 1%, well below its previous estimate of 2%.
The chancellor confirmed that there would be no increase in tax and that defense expenses would increase 2.5% of GDP.
The spring press release was before the implementation next month of a major increase in national employer insurance contributions, announced in the first budget of Reeves in October.
The measure should increase 23.8 billion pounds sterling during the year 2025-26, going to 25.7 billion pounds Sterling in 2029-30. It is preparing for tax increases which have already been implemented, in particular the taxation of VAT on private tuition fees which entered into force in January.
The Chancellor also assaulted to a band of other tax measures, in particular capital gains tax and succession tax on agricultural and commercial goods.
