What's new in Labour's Spring Budget?

It's been an interesting nine months since Labour's election into parliament, with Prime Minister Keir Starmer at the helm, Angela Rayner as deputy PM, and Rachel Reeves as Chancellor of the Exchequer.

Labour's path to winning the election was underpinned not only by the country's lack of confidence in the Conservative Party but also by Labour's proposed six-point 'Plan for Change'.

Promising to deliver

Deliver economic stability
Cut NHS waiting times
Launch a new Border Security Command
Set up Great British Energy
Crackdown on antisocial behaviour
Recruit 6,500 new teachers

With the latest development in the United States election, this has been the first major global event upon Labour's tenure in office. The meeting between President Donald Trump and President Vladimir Zelenskyy did not go as either country would've hoped. Following up on this, the UK population is judging Starmer on his and Trump's relationship, with their first point of contention being their involvement in the war against Ukraine. Where in the public address Trump stated his frustrations with the money the previous Biden-led government had sent to Ukraine while Starmer emphasised how a lot of the money the UK has sent to Ukraine has been gifted, showing support for Ukraine. Alongside this controversial topic, Trump continues to polarise in the early part of his term with the current tariff impositions he's placed on China, Canada and Mexico.

Starmer and the Labour government are also dealing with issues faced in the UK, with the primary aim of bringing the UK economy back to stability. The public is seemingly losing confidence in the party they voted for. YouGov polled 1521 - 3416 GB Adults on how the government is handling the economy in the UK, 11% voted 'Don't know', 16% voted 'Well' and 73% voted 'Badly'.

Rachel Reeves has generated a lot of discussion over her Spring Budget announcement on the 26th of March. The main controversy surrounding the cuts to welfare benefits and the potential further cuts the budget will face upon the next budget announcement.

Reeves stated that their Labour government have achieved the following four successes with 9 months in office:

“Restoring stability to our public finances”
“Giving the Bank of England the foundation to cut interest rates three times since the General Election
“Rebuilding our public services with record investment in our NHS and bringing down waiting lists for 5 months in a row
“Increasing the National Living Wage to give 3 million people a pay rise”

The Spring 2025 report highlights, "Policies announced so far this Parliament are expected to raise the level of output by 0.6% by 2034-35."

Focuses on Growth, Investment and Reform

The report highlighted the main growth strategies the Spring Budget aims to bring into affect by focusing on investment, reform and security.

Investment

"Supporting growth by investing £13 billion more in capital infrastructure over the next five years, launching a construction skills package to train up to 60,000 more skilled workers, and investing an additional £2 billion in social and affordable housing."

Reform

"Reforming the state to ensure public services are productive and agile, welfare spending is targeted towards those that need it the most and the tax that is owed is paid."

Security

"Making a fully funded commitment to increase NATO-qualifying defence spending to 2.5% of Gross Domestic Product (GDP) by 2027, including by providing an additional £2.2 billion of funding for the Ministry of Defence (MOD) next year."

Future

If Labour sticks with its bottle-necked policies, growth seems to be guaranteed by the next general election. With CPI forecasted to return to the Bank of England's target inflation rate to remain at 2% allowing for a stable economy free from the burden of strict lowered consumption but the movement of money flowing around the economy through consumption.

Will Labour achieve its year's goals?

Some changes have hit some of the UK population in the pockets with controversy surrounding the welfare cuts planned by Labour, Reeves states, "The government is committed to helping people start or stay in work, while protecting those who cannot work due to ill health. This is essential for driving opportunity, producing better employment outcomes and living standards, as well as making the system more fiscally sustainable. 1 in 10 people of working age now claims an incapacity or disability benefit and spending on incapacity and disability benefits for working age adults has increased by £20 billion since the pandemic, an increase of almost two-thirds.33 2.31 On 18 March the government published Pathways to Work: Reforming Benefits and Support to Get Britain Working. The Green Paper outlines reforms to incapacity and disability benefits which will save £4.8 billion from welfare spending in 2029-30, making the welfare system more pro-work and more fiscally sustainable."

"To address this imbalance, the government will increase the Universal Credit standard allowance for new and existing claims above inflation from 2026-27. This means the standard allowance weekly rate for a single person aged 25 and over will increase from £92 in 2025-26 to £106 in 2029-30. The Universal Credit health element will be frozen for existing claimants until 2029-30, and for new claims, the Universal Credit health element will be reduced to £50 a week in 2026-27 and then frozen until 2029-30.35 The Green Paper is proposing to protect the incomes of those on Universal Credit with the most severe lifelong conditions through an additional premium."

Although the above measures by the chancellor look to bring money back into Labour's core principles of keeping money in the population's hands, the policies being enforced look to bring this incrementally and with further cuts to come before they can attempt to achieve their goal of their budget moving into "Balance", ensuring day-to-day costs are met by revenues and debt to be falling as a share of the economy by the fifth year of the forecast.

With the majority of Brits on the YouGov survey of whether Labour will achieve their weighty goals, most Brits do not believe they will. As it stands, the economy is in bad shape and it can either be seen that 'it has to get worse, before it gets better' or 'we want change and we want it now'. Labour has a long way to go before reaching the targeted public consumption and economic inflation targets, hence their strict policies. The growing concern is although the policies aim to bring growth, it will be off the backs of the people who need help the most.

For more information on the economy and how it works, look out for our 'Economy - Beginner Series' coming soon.

Glossary

Bank of England... the United Kingdom's Central Bank that manages inflation, regulates major banks and stabilises the country's financial system.

Benefits... a payment made by the state or an insurance scheme to someone entitled to receive it.

Capital... wealth in the form of money or other assets owned by a person or organisation or available for a purpose.

Chancellor of the Exchequer... the UK government's chief financial minister and as such is responsible for growing the UK economy, raising revenue through taxation or borrowing and for controlling public spending.

Conservative Party... a politcal group/ party historically known for their focus on private property, religious institutions and social hierarchy, for the UK this meant the monarchy and the aristocracy.

Debt... a sum of money that is owed or due to private or public organisations.

Deputy Prime Minister... the second head of an elected government; the principal minister of a country or nation, usually in the absence of the Prime Minister due to absence.

Economy... a complex system of production, consumption, and exchanges of resources (goods, services, money) in a country or a region.

Fiscal... the term used to relate to financial matters of a private or public organisation.

Green Papers... documents produced by the Government, its aim is to allow people both inside and outside Parliament to give the department feedback on its policy or legislative proposals.

Gross Domestic Product (aka 'GDP')... a measure of the size and health of a country’s economy over a period (usually one quarter or one year), taking into account; household spending, investment, government spending, net exports.

Inflation... the measure of how quickly the prices of goods and services are rising.

… calculated as the average price increase of a basket of selected goods and services over one year.

Labour... a political group/ party historically known for their focus on Democratic Socialism, social justice, and decentralisation.

National Living Wage... is higher than the National Minimum Wage - workers get it if they’re 21 and over.

NATO... stands for the North Atlantic Treaty Organisation, an intergovernmental military alliance of 30 European and 2 North American countries. It was formed in 1949 to provide collective security, especially against the Soviet Union, and to prevent the revival of nationalist militarism in Europe. The core principle of NATO is that an attack on one member is considered an attack on all, leading to a collective defence response.

NHS... NHS England leads the National Health Service (NHS) in England.

Policy... a set plan for action followed by a business, a government, a political party, or a group of people.

Prime Minister... the head of an elected government; the principal minister of a country or nation.

Revenue... the money generated from normal business operations.

Spring Budget... an annual event where the UK Chancellor of the Exchequer outlines the government's financial plans and economic forecasts, typically in the spring, providing an update on the economy and potential policy changes.

Universal Credit... a payment to help with your living costs (for people with low income, out of work or cannot work), this is paid monthly, or twice a month for some people.

Welfare... help given by the state or an organisation/ charity to people who need it.