The Chancellor of the Exchequer presented her Spring Statement to Parliament on Wednesday 26 March.
Introduction
The government is focused on securing Britain’s future through its Plan for Change – driving economic growth, building an NHS fit for the future and keeping the country safe.
At the Budget last autumn, the government reset public spending, including by addressing £22 billion of in-year pressures, the vast majority of which were recurring. It put the public finances on a sustainable path, underpinned by tax reforms that protected working people and new, robust fiscal rules that embed stability, while supporting sustainable investment in public services and growth. The government also increased the National Minimum Wage (NMW), giving millions of people a pay rise, and froze fuel duty.
This stability is paying off. The Bank of England have cut Bank Rate three times since the start of the Parliament. At the end of 2024, real wages were growing at their fastest rate in over three years.
Since autumn, the world has changed. Europe is now facing a generational challenge to its collective security. Global economic uncertainty has increased sharply, growth has slowed in many of Britain’s major trading partners, and borrowing costs have risen across most advanced economies. As an open trading economy, the UK is not immune to these challenges.
But, despite a changing world, and supported by the measures that this government has taken, the economy is now forecast to grow faster than expected at the Budget last autumn, in 2026 and every year thereafter. And decisive action since the Budget last autumn means that the fiscal rules continue to be met two years early. The government has restored in full headroom to the stability rule. The investment rule is also met with a £15.1 billion buffer in the target year.
The government is now taking action to go further and faster to strengthen the UK’s security, to reform the state and to grow the economy. It is making the right choices to bring security to working people and to put more money in their pockets. The Spring Statement sets out how the government is:
- 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.
- 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.
- 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.
The Office for Budget Responsibility (OBR) says that the planning reforms included in the government’s National Planning and Policy Framework (NPPF) will lead to 170,000 additional homes built over the forecast period. This increases the level of real GDP by 0.2% by 2029-30, adding £6.8 billion to the economy, and by over 0.4% in 2034-35. The government’s planning reform measures have led to the biggest positive real GDP effect that the OBR has reflected in its forecast for a policy with no fiscal cost. This helps to secure the public finances: the economic effect of government policies, driven by planning reforms, reduce borrowing by £3.4 billion in 2029-30. This improvement in the growth outlook reflects only the changes to residential planning. The government is going further and faster to drive growth through ambitious supply side reforms, including via increased capital spending, regulatory reform and the Planning and Infrastructure Bill.
Going further and faster on defence to strengthen national security
As set out in the Plan for Change, national security is the first duty of the government. Security abroad directly affects stability and prosperity in the UK. To reflect the evolving nature of the threat while maintaining economic stability, reductions in the Official Development Assistance (ODA) budget will support an increase in NATO-qualifying defence spending to 2.5% of GDP by April 2027, with an ambition to increase to 3% in the next Parliament as economic and fiscal conditions allow.
The Spring Statement accelerates towards this by providing an additional £2.2 billion of funding for MOD next year – a down payment on the increased funding which will strengthen the UK, and drive economic growth by boosting Research and Development (R&D) and innovation including through the upcoming Strategic Defence Review and Defence Industrial Strategy.
Going further and faster on reform
At the Budget last autumn, the government reset spending plans to recognise the £22 billion forecast overspend against day-to-day spending totals set at Spring Budget 2024, and provide much needed investment in public services.
NHS waiting lists have now fallen for five months in a row, breakfast clubs are being rolled out in primary schools, and asylum costs are falling.
As announced by the Secretary of State for Work and Pensions in the Pathways to Work Green Paper, the government is driving ambitious reforms to create a more pro-work welfare system for those who can work, and to protect those who cannot. These reforms put welfare spending on a more sustainable trajectory, with the OBR confirming that they will save £4.8 billion from the welfare budget in 2029-30 and that welfare spending will fall as a share of GDP in the medium term.
The government is driving efficiencies and reforming the state – including by bringing NHS England back into the Department of Health and Social Care (DHSC). The Spring Statement announces a £3.25 billion Transformation Fund to drive efficiencies across government, and save money later in the Parliament. This will support the fundamental reform of public services, seize the opportunities of digital technology and artificial intelligence (AI), and transform frontline delivery to release savings for taxpayers over the long term.
Compared to plans set out at Spring Budget 2024, departmental spending will now be almost £70 billion higher in 2028-29 (in 2024-25 prices).
Going further and faster to grow the economy
Growth is the central mission of the government. The government is restoring stability, increasing investment, and reforming the economy to drive up prosperity and living standards across the UK.
At the Budget last autumn, the government increased capital investment by over £100 billion over the Parliament. Since then, the government has set out its vision for a modern industrial strategy centred on high growth sectors and catalysed by the National Wealth Fund. And it is overhauling the UK’s regulatory system and fast-tracking planning decisions on major economic infrastructure projects. This is alongside outlining how the UK will capture the opportunities of AI to enhance growth through the AI Opportunities Action Plan.
The government will set out capital spending plans for the Parliament at the Spending Review in June. Ahead of that, the government has announced an additional £2 billion for social and affordable housing for 2026-27, as a down payment on the government’s ambition to build 1.5 million homes in England in this Parliament, supported by reforms in the Planning and Infrastructure Bill.
To ensure the construction industry has the capacity to deliver this government’s plan to get Britain building, the government has committed to funding a £625 million package for skills in construction, expected to provide up to 60,000 more skilled workers this Parliament.
Spring Statement takes the decisions required to provide security, reform the state and grow the economy. Through the growth mission, the government will aim for the highest sustained growth in the G7 – with more people in good jobs, higher living standards, and productivity growth in every part of the United Kingdom. At the Spending Review in June, the Budget in the autumn and across the Parliament, the government will continue to prioritise growing the economy to deliver change.
