This blog post is going to be updated frequently during the course of Rachel Reeves' Spring Statement, the delivery of which should start at 12.30 today.
To get the latest comments made by me, refresh this post quite often. It is pretty likely that I will add to this post every two to three minutes until about 1.25, when I am likely to be moving into Jeremy Vine's studio on BBC Radio 2 to comment on what Reeves has said.
12.30. Off we go.
12.32. This is not a budget, so the Speaker is in the Chair.
12.34. Rachel Reeves is proud of her achievements, few of which are hers.
12.35. Now, she says the world has changed. The problem is, we are not going to hear any change of plan from her.
12.36. The government is still on the side of 'working people'. Shame about the rest.
But apparently they are going to be more prosperous - hence the goal to punish those who cannot work.
12.37. The Office for Budget Responsibility forecast is next, but they have to work within the 'non-negotiable' fiscal rule (until it fails, that is).
Apparently, working people must not pay the price for economic uncertainty. Again, that's why those on benefits presumably are.
12.39. The OBR says that Reeves would have been in deficit by 4.1bn in 2029 without changes now, from a surplus of £9bn. So, she has restored the surplus by 2027 - to a total of £9 billion in 2029. The whole of her world is based on a spreadsheet forecast that is inherently wrong.
12.40. Investment is falling in real terms to achieve this - this is not a basis for growth.
12.41. Reeves says we must reduce debt to reduce interest costs. No mention of falling rates or cutting the rate paid on the central bank reserve accounts. A total failure on her part.
12.42. She claims she has delivered no tax increases for working people, and there will be none now - so she is clamping down on tax evasion more - by spending on HM Revenue & Customs. But the target is an extra £1 billion - which is peanuts in the grand scheme of things.
12.43. Labour is the party of work - she says - the Workhouse more likely, I think. She asks no questions about why young people are not working, implicitly blaming them.
12.45. OBR says Kendall's cuts save £4.8bn a year by 2029. Mainly on PIP - at maybe £4,000 a year each person involved.
12.46. Welfare spending is going to fall - and she is proud of it, apparently.
12.46. Breakfast clubs are nice - but let's not pretend they are everything that matters. Labour has to do better than that.
12.47. We have to wait for the Spending Review to learn almost anything else about Labour's plans.
12.48. Defence spending is going up enough to pay for a Dad's Army.
12.48. Wes Streeting is going to deliver savings to Rachel.
12.48. The cost of government is going to be cut by 15% - a recipe for collapse and that is 80,000 civil service jobs going - not the 10,000 forecast. She is going to pay people to leave.
12.49 Rachel Reeves is making almost all her cuts in the civil service - the government is going to withdraw from society.
12.50. She claims she is saving tens of billions by giving up on management. Good luck with that.
12.51. She says she is increasing investment, but the figures she gave earlier showed a decline. Something is wrong here.
12.52. OBR inflation forecast is 3.2% this year, then 2.1% next and 2% thereafter. And I[pswich will; also win the Premiership, by the way.
12.53. OBR on growth is down to 1%, and she is not happy. So she says she will tear up regulations to make growth possible, which is naive in the extreme unless you also want to burn the planet.
12.54. 3% will go on defence - 6% increase by 2027, but just £2.2 billion now. Putin is shocked. JD Vance is mocking.
12.56 Reeves announces the military-industrial complex is going to get lots of money, and she will try to spend it faster.
12.56. Nuclear is still key to our defence. Why? Is it relevant anymore, at all?
12.57. Finally, £2 billion extra export credit so people can buy our defence equipment.
12.57. It seems that defence is the only idea when growth is to be discussed. It has the worst growth multiplier of almost any spending you can find. This is not going to work at almost any level.
12.58. OBR says planning reform will permanently increase growth by 0.2% in the next year, and by 0.4% in ten years or £15 billion. This is really talking about fantasy, small stuff from Reeves. She is clutching at straws. There aren't enough builders for a start.
13.00. Supposedly 1.3 million new homes by 2029, which falls short of the 1.5 million they promised.
13.01. Reeves says her growth policies will add £3 billion tp public income by 2029. This is so small it is a rounding error in her spreadsheet - and she must know it.
13.02. Skills shortages will be tackled with £600 million to train 600,000 bricklayers from ten colleges, which most of them will not be able to afford to get to. So, how is that going to work? This is going to be harder ot reach than a university. The spend will be just £10,000 each, much less than a university place.
13.04 Growth 0.9% next year, to 1.8% in 2028. Historically very low - and it is not going to trickle down. per head, that might well be nothing.
13.05. Reeves says people will be £500 better off under Labour. No mention of distribution. And I bet that is not inflation-adjusted.
13.06. Defence and building are apparently how we are to grow. But neither has been working for a long time. So good luck with that, I say. There was nothing here to suggest how any of this will happen.
This was not a massive non-event. It was a moment when it became clear Reeves and Labour have no idea what they are doing, and have no plan for anything. They really are not up to the job.
Now, highlights from the OBR Report, just published, First, this:
Since the October forecast, developments in outturn data and indicators of business, consumer and market sentiment have, on balance, been negative for the economic outlook.
And:
In our central forecast, real GDP is now projected to grow by 1.0 per cent in 2025, half the 2.0 per cent assumed in October.
Reeves has failed. And her forecasts last time were dire.
The OBR added:
We expect the unemployment rate to peak at 4.5 per cent (1.6 million people) in 2025 as spare capacity opens up, before falling to its estimated structural rate of 4.1 per cent in 2028.
That is not growth. That is an inconsequential change.
And this is the interest rate forecast - up to 5.5%:
This is massively worrying.
If this is the inflation forecast, what the OBR is forecasting is massive further upward redistribution of wealth in the UK:
Real interest rates of 3.5% are staggeringly high.
At the same time, the growth figures Reeves quoted are too high. Per head, they are much lower:
After falls of 0.9 per cent in 2023 and 0.1 per cent in 2024, real GDP per person is expected to recover slightly with growth of 0.3 per cent in 2025, before averaging 1.4 per cent over the rest of the forecast.
This is not meaningful growth - and not the basis of a plan for change. Something much more fundamental has to change.
And these are the sectoral balance forecasts:
Households are going to cut their savings, because they will have no choice but to do so, I expect. Business is supposedly going to borrow heavily, which I can guarantee they will not in an economy like this, with their costs rising and demand falling. And the government is - as ever - going to cut its net borrowing. So, who is going to fund the UK? The overseas sector, which is going to save more than ever in the UK - no wonder Reeves is creeping so heavily to the City and dirty money. This is wildly inaccurate forecasting and wishful thinking.
And this is the news on housing:
Interest rates will be up by at least 1% - so big mortgage increases are coming, whilst house prices are going to rise considerably, apparently. That is really going to help every struggling family in the country.
Let me conclude for now with this question:
How likely is that to happen?
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
re 12.36. The government is on the side of the working people? . . . it’s got bells on.
Rachel from Accounts speaks forth…………………………………..
Zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz
I got notification of my annual pay rise today and it amounts to 1%.
The company had budgeted for 3.5% but they are paying the increased employers NI contributions from the allowance for pay rises!
I believe there are a few other companies in construction doing the same.
So much for not taxing working people! We should be taxing the idle rich through taxes on income from wealth as described at length in the Taxing Wealth Report.
Sorry to hear that.
I feel for you William.
My pay rises 1% to £12.94 an hour for similar reasons. Moreover I was offloading 8% into a pension because the company matched those contributions. This will be illegal as it will take below the minimum wage, so I’ve just been informed I’m only to be permitted to offload 6%.
Thanks for very little Rachel.
The job will change too as the company will take on fewer new starters and having relaxed days where you showed the newbies the ropes was a perk of the job. It’s going to be more heads down outputs focussed work from now on. No wonder mental stress in the workplace is going south.
Thanks Willy John, but I do not need sympathy as I am a 40% tax payer on a good salary, 2/3 of an MP.
It is people like you who are being much more unfairly treated.
I note that in the last year we gained another three billionaires in the UK and wealth inequality continued to grow. We so need to tax the rich and increase government spending money on the services we need to bring the nations health back to where it was a few years ago so we can enjoy a retirement in good health. Life expectation has fallen since 2010 and will continue to decline until we spend the money to get people back to better health as is well covered in this blog.
I work in construction as well. I read an article in the Construction Enquirer today that as many as 30% of the industry is considering leaving due to workload, stress and mental health. But yeah, get Britain building. As for the private sector fueling growth, Kier Group have zero private sector contracts on their books currently. It’s all public sector work. And Reeve and Starmer want to shrink the role of the state.
All very at odds with what we have heard today
Thanks, Tom
Rachel from accounts as expected has produced the expected rubbish. The only good news is she will not be chancellor by the next election – the problem is that the economy, society and the environment will be in a sorry state by then.
Re housing Rachel seems not to realise that we already build more houses than we need and currently have a surplus of 1.5 million. Its not a lack of supply that is the problem but RR is not bright enough to know that!
I assume since the Civil Service is being cut, any essentials will be run by private sector or kicked into the long grass? The worry is that BlackRock owns a chunk of almost all corporations in the USA, I assume they’ll own a chunk of the UK too soon, along with Peel Holdings and all the other private corps in Economic Zones.
I recommend Angus Hanton’s Vassal State: How America runs Britain.
not worth all the effort on your part no one is that bothered
Another troll wasting his tome
More on “2.56. Nuclear is still key to our defence. Why is it relevant?”
‘CND’ the Campaign for Nuclear Disarmament was a prominent political feature of my teens and twenties. All younger people have had to live with the fear that a nuclear-armed government could act in seriously irrational ways.
Our so-called ‘Independent’ deterrent was never independent of the US.
‘Deterrence’ might have worked a bit but Ukraine has attacked Russia; Hamas and Hezbollah have attacked Israel. Both countries are in possession of nuclear weapons.
Hello Joe,
you might find this quite informative on how ineffective the UK’s nukes are:
https://www.youtube.com/watch?v=O2Z0Y-mFMBk
Money wasted
Would Russia have attacked Ukraine, had they not given up their Soviet-era nukes after the security guarantees provided by the west in the Budapest memorandum? The security guarantees which the west then failed to honour back in 2014? Almost certainly not.
The Baltic states, Poland and even other east European states are currently protected from invasion by NATO membership, but deterrence is going to become a much bigger deal now than was previously the case before Trump began his wrecking of the US state and its alliances. This makes it all but certain that the post-war security consensus will disappear. Creating nukes isn’t particularly difficult for a developed country – creating the enriched fissile material is the trickiest part, but the technologies are well-understood. The detonators for the bombs themselves are just 1950s engineering.
It is all but certain that we will now see Poland developing nukes at the very least and there is a very good chance that Finland and the Scandinavian countries will follow suit.
In the Pacific, South Korea, Taiwan and Japan will see that the security they previously felt due to their long-standing alliance with the US isn’t going to be worth very much so they will be developing plans for nuclear weapons right now. Even Japan.
All three are among the most technologically advanced nations on the planet with great experience in operating and even designing nuclear power plants. When they decide they need nukes, they will get them and quite quickly.
By failing to support Ukraine properly ever since the conflict began in 2014, the west has all but guaranteed that proliferation is quickly going to take place.
Two comments from a quick look at the OBR report. The foreward complains that the government gave them information about the benefits reforms far too late to check the numbers properly. They rate the risks associated with the numbers as high or very high in paragraph 3.49.
And they rate the chances of the government actually meeting their fiscal rules as no better than 50:50. Paragraph 7.12. The toss of a coin.
Thanks
12:42 “no tax increases for working people”
Can she explain fiscal drag then?
Working people will experience a tax increase – not in the rate levied by the legislation, but certainly by the percentage deducted from wages.
As will pensioners who pay tax.
Given the productivity issues in the UK, in the building industry in particular why are we looking to train 10000 bricklayers when we should be moving towards prefabricated buildings like most of Europe?
Very good question
We could even print them
But innovation is not allowed
This commentary was by far the better one I fell asleep to her lies and misdirection about how much good they’ve done in 5 mins.
In 9 months of government Rachel Robber Reeves and Kid Starver, you haven’t made progress you’ve doomed us further, as seen by this inept statement, poverty and austerity are coming and I for one have to find out how to grow a money plant as that austerity is landing at my immediate family’s door due to your harsh cruelty towards disabled people. The fact they have had a pay rise is more sickening how is that not mentioned in this plan of cuts why are we cut and not them. Live on a month total household income (2 disabled autistic adults) of £850, pay your bills, food and expenses, like to see you try, as that’s mine and now I have a gas bill rise, petrol increase, food bill price increase that’s at least £80-£100 extra expenses coming in the next 6 months added to the Pip cuts. Oh it’s okay national min wage has increased I get an extra tenna (literally that’s it). I get a tenna. Round of applause to labour for a royal fu@kup.
RIP labour RIP.
Is it just me, or does it seem a bit strange that housing prices are forecast to continue to rise rapidly at the same time that the number of houses being built is (purportedly) going to be rocketing up at the greatest rate since the 1950s? Doesn’t supply and demand mean anything these days? Especially when prices are so high that it is pretty much impossible for most of the population to afford a house.
If they are making the assumption that speculation in the property market is going to drive the increase in housing prices, that seems to me to be something that the government should really be trying to do something to about. Unless they are currently building their own property portfolios while Rome burns.
Nothing about this Report makes sense…
“Doesn’t supply and demand mean anything these days?”
To the best of my (non-technical) knowledge, it doesn’t – in the housing market.
Witness the extraordinary house-building booms prior to 2008 in 3 countries familiar to us – Ireland, Spain and the U.S.; supply rose and so did prices, for reasons to do with unrestricted credit flowing into the housing market. As houses are often assets to be rented out that seems likely to happen in the UK too. If you don’t control the flow of credit into housing – as we did in the UK prior to 1980* – and you tax unearned capital gains from property at a lower rate than you tax almost anything else, then that is where capital will go.
In addition, the Govt sems to be expecting the volume house-builders to reach their targets for them, but can you imagine what the shareholders of those companies would do to a board of directors that built at such a rate so as to depress prices and thus profits? It’s not going to happen.
So if the Govt expects increasing build volumes to depress prices, it’s just another thing they seem to have misunderstood.
*At the point, bank loan books contained virtually no loans on domestic property; now, with returns guaranteed and unassailable collateral, about 80% of their lending is on property, greatly reducing capital flows into entrpreneurial lending. I’m sure they’re looking forward to financing new builds, given that they can – unlike the old building societies – create money pretty much ex nihilo.
Good points
Labour’s manifesto promises were predicated on growth – a growth which was never likely to happen.
Now Labour is in Government, they have been forced to face that. Their response has been to blame: a very questionable £22 billion “black hole”; Vladimir Putin; Donald Trump; …..(choose your own additions). The IFS et al have said clearly that Labour was warned about said defecit prior to the election.
Covering up those perfectly predictable cock ups by taking the income – sometimes the only income – from sick people is not what I would call “a moral duty”.
Reeves’ imaginary fiscal rules are now seriously damaging the economy, an economy which she says she has stabilised.
Not much to add to a good rolling blog and the comments already made. But there is one thing that really does not add up to me….whatever your views on the measures.
The inflation forecast is barely changed, the growth forecast has been cut – so why have they forecast rising gilt yields? Indeed, gilt yields rising by more than their last forecast. It is nonsense.
None of this makes sense
I am trying to work it out in the OBR documents – but I sense something very wrong here .
“We expect the unemployment rate to peak at 4.5 per cent (1.6 million people) in 2025 as spare capacity opens up, before falling to its estimated structural rate of 4.1 per cent in 2028.”
Really? With all the people miraculously “cured” of their disabilities who thus are pitched off ESA/PIP and onto Job Seeker’s Allowance where the chances of their ever being employed are practically zero? More like 3.2 million people than 1.6 million, I’d say. Add to that the recessionary unemployment to come thanks to Reeves mismanagement of the economy and it’ll be just like the good old days of Thatcher!
Agreed
It’s not fair to criticise Rachel Reeves for stifling economic growth.
Her statement today will have done wonders for the sales figures of manufacturers of televisions, phone companies and laptops, desyroyed by irate citizens incensed by the callous incompetence displayed during her emergency austerity budget.
🙂
I was particularly irritated by her regular intercessions about how ‘this Labour government is doing this bla, bla, bla, unlike the party opposite’ followed by the bleating and baaing of our (sic) elected representatives. It sounded almost desperate and as if she were anticipating another general election.
DV let it happen soon…….