The Spring Statement spending update came as the Labour government, elected in July after a landslide election win, faces sluggish economic growth and rising borrowing costs.
Britain’s economy is expected to grow by just one percent this year, revised down from an estimate of two percent made in late October when Labour gave its inaugural budget.
However, the Office for Budget Responsiblity, the UK’s spending watchdog, upgraded the country’s growth forecast for the three following years.
“Our task is to secure Britain’s future in a world that is changing before our eyes,” finance minister Rachel Reeves told parliament in the highly-anticipated update.
Concerns over US tariffs and the war in Ukraine have added to the UK’s economic woes, chipping away the government’s fiscal cushion.
“The threat facing our continent was transformed when [Russian President Vladimir] Putin invaded Ukraine,” Reeves said.
She added that “the job of a responsible government is not simply to watch this change, this moment requires an active government”.
Prime Minister Keir Starmer has recently pledged to hike spending on defence, with the government confirming Wednesday a £2.2 billion boost next year.
To avoid slipping into a deficit, Reeves has cut disability welfare payments and government departmental budgets, blaming a period of heightened uncertainty in global markets.
Ahead of Wednesday’s update, the centre-left government announced it would slash the cost of running the civil service by 15 percent over the next five years, targeting annual savings of around £2 billion. (AFP)
