Chancellor Rachel Reeves is poised to slash benefits further after the UK’s budget watchdog warned last week’s reforms would save over £1bn less than forecast.
The government said the welfare reforms already announced would save £5bn for the Treasury, but the Office for Budget Responsibility (OBR) rejected the estimate, instead putting the savings at just £3.4bn in 2029/30.
Ms Reeves is set to give her spring statement at around 12.30pm on Wednesday, after the Office for National Statistics announced inflation dropped to 2.8 per cent in February from 3 per cent in January, more than expected, as analysts originally forecast that the CPI inflation would come in at 2.9 per cent.
But shadow chancellor Mel Stride pointed out inflation remains higher than when Labour took office.
He said: “We left Labour with inflation bang on target. But since their no-strings-attached union payouts, record tax rises and borrowing splurge, they have pushed up the cost of living.
“The chancellor’s choices have saddled the country with higher inflation for longer. Unless she takes urgent action at her emergency budget today, working families will continue to pay the price."
Key Points
- Reeves primed to slash benefits even more in billions of budget cuts
- Inflation falls to 2.8 per cent ahead of the spring statement
- Reeves to announce extra £2.2bn defence spending in spring statement
- What time is the spring statement?
- Analysis: Things could not look much worse for Reeves
Where inflation eased in February – and where it accelerated
10:33
,
Tara Cobham
Falls in the cost of clothing, kitchenware and air travel contributed to an overall easing of the UK’s inflation rate last month, though prices accelerated for a handful of everyday groceries including eggs and sugar.
Women’s clothes recorded one of the largest movements in inflation, swinging from a year-on-year rise in January of 4.2 per cent to a year-on-year drop last month of 0.2 per cent.
Prices fell faster for children’s clothing in February (down 2.5 per cent year-on-year) than they did in January (down 0.4 per cent), as they did for fridges and freezers (down 7.5 per cent in February, down 0.6 per cent in January); for washing machines, dryers and dishwashers (down 3.7 per cent in February, down 0.4 per cent in January); and for coffee machines and tea-makers (down 8.9 per cent in February, down 5.6 per cent in January).
The cost of air travel fell once again, down 2.6 per cent year-on-year, following a drop of 2.0 per cent in January, according to figures published by the Office for National Statistics (ONS).
Annual inflation slowed in February for a range of groceries, including olive oil, up 11.2 per cent compared with a steeper rise of 16.6 per cent in January; coffee, up 8.6 per cent compared with 11.6 per cent; confectionery, up 2.7 per cent compared 5.7 per cent; and tea, up 1.0 per cent compared with 4.3 per cent, while yoghurt swung from positive inflation in January (up 1.3 per cent) to negative in February (down 1.2 per cent).
By contrast, inflation accelerated for some household essentials, though no items recorded a sharp jump.
The average price of pizza and quiche was up 3.9 per cent year-on-year in February, compared with a rise of just 0.7 per cent in January, while eggs were up 5.0 per cent, compared with an increase the previous month of 4.1 per cent.
Inflation also accelerated for ice cream (up 4.9 per cent year-on-year in February, up 2.2 per cent in January); soft drinks (up 3.6 per cent February, up 2.8 per cent January); and fresh or chilled fruit (up 3.8 per cent February, up 3.0 per cent January), while sugar swung from negative annual inflation (down 2.1 per cent) to positive (0.8 per cent).
The cost of filling up at the pumps showed little movement, with petrol prices down 2.1 per cent year-on-year in February, similar to the drop of 2.0 per cent in January. Diesel prices fell slightly faster last month (down 3.2 per cent year-on-year) than in January (down 2.8 per cent).
Trump administration ‘got a case’ telling Europe to do more on defence, Healey says
10:15
,
Tara Cobham
Donald Trump’s administration has “got a case” for saying that European nations need to do more to fund and provide their own security, the Defence Secretary has said.
John Healey suggested that the US has laid down a “challenge” which the UK is responding to in its work to put together a coalition of nations that would be willing to defend a peace deal in Ukraine.
Mr Healey’s comments came after the US Signal group chat blunder revealed vice president JD Vance hated “bailing Europe out” and Pentagon chief Pete Hegseth said “European freeloading” was “pathetic”.
The comments in the chat, which inadvertently included a journalist from The Atlantic, were related to US strikes against Houthi rebels in Yemen but come against a backdrop of Mr Trump’s drive to end the war in Ukraine and pull back from commitments in Europe.
It comes as Russia and Ukraine have agreed to pause hostilities in the Black Sea, a move Mr Healey welcomed as a potential “precursor” to a broader ceasefire.
However, there are signals that the US could be willing to ease some sanctions on Moscow as part of a deal.
Asked how he felt about being called a pathetic freeloader, Mr Healey told Times Radio: “I regard it more as a challenge.”
He added: “The Americans have absolutely got a case that on defence spending, on European security, on our support for Ukraine, European nations can and will do more, and the UK is leading the way.”
What will be in Reeves' spring statement?
10:00
,
Tara Cobham
Rachel Reeves will soon give an update on her plans for the UK economy as she prepares to make the first Spring Statement of the new Labour government.
The chancellor will also deliver an economic forecast as part of the event, with many predicting further spending cuts to come as the Treasury seeks to tackle ailing growth.
Ms Reeves will make the statement on Wednesday 26 March. She had previously committed to one major economic event a year – the Budget – which usually comes in the Autumn. This is to "give families and businesses stability and certainty on tax and spending changes," she says.
This means there a no major policy announcements expected as part of the statement, although some have predicted that reduced spending targets and some key tax changes will be revealed.
There have also been several big policy announcements in the run-up to the event. Last week, the government unveiled welfare reforms that will amount to £5 billion in spending cuts by 2029/30. The brunt of the cuts will fall on claimants of health-related benefits, with Universal Credit and the Personal Independence Payment both overhauled.
Shortly before this, Labour announced it was scrapping NHS England, the UK’s largest arms-length body, to bring NHS decision making closer to the Department for Health, led by Wes Streeting. The move will see 9,000 jobs lost and save the exchequer £100 million with further reforms to government structures expected.
Below, my colleague Albert Toth reports on what time the spring statement will be and more on what will be in it:
Pictured: Ministers arrive for cabinet meeting as they brace for spring statement
09:55
,
Tara Cobham
Charities and health experts warn welfare cuts could cost lives
09:51
,
Tara Cobham
Charities and health experts have warned welfare cuts could risk lives, as the government prepared to publish an official impact assessment into how many people will be affected by its plans.
Charities have reported a surge in calls and visits to their advice pages following last week’s announcement, which came after lengthy speculation about what might be in store.
Mental health charity Mind said its helpline advisers had reported that some people had indicated their level of worry was such that they felt they had “no choice but to end their own life”.
The charity’s welfare advice line saw calls rise from 90 the previous week to 182 last week, while other information and support lines received more than 2,540 calls, which was a 10 per cent rise on the previous week.
Disability charity Scope said calls to its helpline on the day of the announcement had more than doubled to 344 from 118 the week earlier, while its online community saw 20,000 interactions on the day compared to 15,000 seven days before.
Citizens Advice saw views of its Pip advice pages rise to almost 80,000 views last week, which was a 44 per cent rise from the week before.
Scope said people feel “abandoned by the Government”.
Meanwhile, a group of public health experts said further cuts to social security could lead to deaths.
Writing in the British Medical Journal (BMJ), they said the reforms, coming after years of austerity, would have a detrimental effect on already-vulnerable people.
One of the group, Professor Gerry McCartney – a specialist in wellbeing economy at the University of Glasgow, said: “There is now substantial evidence that cuts to social security since 2010 have fundamentally harmed the health of the UK population.
“Implementing yet more cuts will therefore result in more premature deaths. It is vital that the UK Government understands this evidence and takes a different policy approach.”
Average UK house price rose by 4.9% in year to January, ONS says
09:43
,
Tara Cobham
The average UK house price increased by 4.9 per cent in the year to January 2025, the Office for National Statistics (ONS) said.
The annual growth rate increased from 4.6 per cent in the 12 months to December 2024.
Average house prices increased to £291,000 (4.8 per cent annual growth) in England, £210,000 (6.0 per cent) in Wales, and £187,000 (4.6 per cent) in Scotland, in the 12 months to January 2025.
Watch: John Healey says National Security is the foundation for everything’ as Defence gets £2.2bn boost
09:30
,
Tara Cobham
WATCH: Disability advocate warns against welfare cuts planned in spring statement
09:24
,
Bryony Gooch
Analysis: Things could not look much worse for Reeves
09:12
,
David Maddox
The chancellor Rachel Reeves was preparing for today’s spring statement already knowing she had little or no room for manoeuvre and was faced with a sluggish economy with virtually no growth.
But the news from the Office for Budget Responsibility this morning that the harsh benefits cuts announced will not have the desired effect of cutting £5bn and instead only save £3.6bn is a major blow.
It means more difficult decisions elsewhere in the government while the chancellor’s own promises and fiscal rules prevent further tax rises or borrowing on any significant level.
Added to that the news on inflation coming down is a small bonus but the overall figure remains higher than her inheritance from the Tories.
Ministers in the last few days have also been heavily critical of her accepting freebies in what is being seen as a sign that her future is looking very shaky.
Ms Reeves needs a big performance today to win back confidence in her ability to steward the economy and persuade businesses and her own colleagues that she has the intellect necessary to turn things around.
Minister says Reeves will deliver a 'tough' statement 'in tough times'
09:07
,
Bryony Gooch
Defence Secretary John Healey has said today’s statement “will be a tough, strong statement in tough times.”
“The chancellor will set out this afternoon that the world is changing, our task is to secure Britain’s future and that’s why she is making an extra £2.2 billion available for defence.”
The chancellor is expected to announce further welfare cuts at a time when she has promised a £2.2 billion boost to defence spending.
Asked why Ms Reeves did not ease her self-imposed rules to allow greater borrowing for defence spending, Mr Healey said: “Whichever way you do it, if you borrow more you have to service the cost of that borrowing and if you borrow more the price goes up.
“We are in a situation, nine months into this government, where the overhang of the period of Liz Truss means that our debt levels are still too high, the cost of servicing that debt is too high.
“And the central responsibility – that will be at the heart of the way that Rachel Reeves sets her statement out – of strong public finances, fiscal responsibility in the end will provide the foundation for us to rebuild the economy, rebuild confidence in British investment and then rebuild the public services.”
In pictures: Cabinet ministers arrive at Downing Street ahead of spring statement
09:03
,
Bryony Gooch
Rachel Reeves ‘set to impose further welfare cuts worth £500m’
08:57
,
Bryony Gooch
Rachel Reeves is reportedly gearing up to make further cuts to the welfare system after the UK’s budget watchdog warned the reforms would save over £1bn less than forecast.
The government said the sweeping cuts to welfare announced last week would save £5bn for the Treasury, but the Office for Budget Responsibility (OBR) is said to have rejected the estimate, instead putting the savings at just £3.4bn.
The row will leave a gaping hole in Treasury coffers, which the chancellor will need to fill if she is to stick to her rule of meeting day-to-day spending through tax receipts, rather than extra borrowing.
Millie Cooke reports:
Benefits reform and jobs cuts: The political headaches for Labour in Reeves’ spring statement
08:53
,
Bryony Gooch
Rachel Reeves is set to unveil billions of pounds worth of cuts in her spring statement, in what could be one of the most pivotal moments in her career.
The chancellor had hoped her speech might be simply a straightforward update on the state of the country’s finances.
But faltering economic growth and higher than expected borrowing figures, combined with her pledge not to raise taxes after her multi-billion pound raid in last year’s Budget, have raised the stakes.
Kate Devlin reports:
MAPPED: Pay growth versus inflation
08:45
,
Bryony Gooch
Spring statement - today's agenda
08:43
,
Bryony Gooch
9am - Sir Keir Starmer to host a Cabinet meeting
11.20am - Rachel Reeves leaves No 11 Downing Street
12pm - Prime Minister’s Questions
12.30pm - Spring statement starts
1.30pm - Shadow chancellor responds to spring statement
2.30pm - Office of Budget Responsibility Chair gives livestream press conference, meanwhile Rachel Reeves goes on defence-related visit
4.15pm - Rachel Reeves to give a press conference
Reeves admits ‘further and faster’ action is needed to kickstart growth
08:30
,
Bryony Gooch
Rachel Reeves will admit that “further and faster” action is needed to kickstart growth in the UK as she delivers her spring statement.
The chancellor will give an update on her plans for the UK economy on Wednesday, as she make the first spring statement of the new Labour government.
Before the statement, the Office for Budget Responsibility (OBR) will publish its forecast on the UK economy, which is widely expected to slash its forecast for economic growth.
Athena Stavrou reports:
Welfare in numbers: The facts behind Britain’s soaring benefits bill
08:28
,
Bryony Gooch
Britain’s welfare bill has ballooned, with 23 per cent of the working-age population now in receipt of some form of benefits, figures analysed by The Independent reveal.
Labour has branded the spiralling costs of a life on sickness benefits “unsustainable” and has vowed to clamp down by slashing the budget by £5bn.
Alicja Hagopian and David Maddox report:
What time is the spring statement – and what will be in it?
08:22
,
Bryony Gooch
Rachel Reeves will soon give an update on her plans for the UK economyas she prepares to make the first Spring Statement of the new Labour government.
The chancellor will also deliver an economic forecast as part of the event, with many predicting further spending cuts to come as the Treasury seeks to tackle ailing growth.
Albert Toth reports
Prime minister says 'we will deliver security for working people'
08:19
,
Bryony Gooch
Ahead of the spring statement, prime minister Sir Keir Starmer said: “In an era of global change, we will deliver security for working people and renewal for Britain.”
What will Rachel Reeves say in her statement?
08:16
,
Bryony Gooch
Already, the chancellor is predicted to make a number of sweeping cuts across governmental departments, including welfare, while boosting defence spending.
In her statement, Ms Reeves will tell MPs that a “more insecure world” requires a greater focus on national security, as she promised to increase defence spending by £2.2 billion from April. It will be part of the previously announced plan for the biggest boost in military funding since the Cold War funded by cutting the aid budget.
She will say: “This moment demands an active government stepping up to secure Britain’s future. A government on the side of working people.
“To grasp the opportunities that we now have and help Britain reach its full potential, we need to go further and faster to kickstart growth, protect national security and make people better off through our plan for change.”
Ms Reeves will also tell MPs she is “proud” of her record in office – despite the sluggish economic growth figures which have heaped pressure on her.
MAPPED: UK Consumer Price Index
08:11
,
Bryony Gooch
The rate of Consumer Prices Index inflation fell to 2.8 per cent in February from 3 per cent in January, the Office for National Statistics said.
Visualisation by Jabed Ahmed:
Defence minister defends 'coalition of willing'
08:03
,
Bryony Gooch
Defence secretary John Healey responded to US special envoy Steve Witkoff’s dismissal of Sir Keir Starmer’s plans for a “coalition of the willing” peacekeeping force in Ukraine as “a posture and a pose”.
Mr Healey said: “The UK is putting together the coalition of the willing in the circumstances, which I hope we can secure, of a negotiated peace settlement.
“We’re responding to that American challenge for European nations to do more to support Ukraine – and we are – and we’re responding to the requirements of the Ukrainians, who say ‘in the circumstances of a ceasefire, what security guarantees have we got that we won’t have Russia reinvading?'”
Defence minister admits Trump administration 'have got a case that European nations can do more'
07:52
,
Bryony Gooch
Defence secretary John Healey has admitted that the Trump administration has ‘got a case’ for saying European nations can do more to fund and provide their own defence and security.
The defence secretary’s comments came after the US Signal group chat blunder revealed vice president JD Vance hated “bailing Europe out” and Pentagon chief Pete Hegseth said “European freeloading” was “pathetic”.
The comments in the chat, which inadvertently included a journalist from The Atlantic, were related to US strikes against Houthi rebels in Yemen but come against a backdrop of Mr Trump’s drive to end the war in Ukraine and pull back from commitments in Europe.
Asked how he felt about being called a pathetic freeloader, Mr Healey said: “I regard it more as a challenge.”
He added: “The Americans have absolutely got a case that on defence spending, on European security, on our support for Ukraine, European nations can and will do more, and the UK is leading the way.”
ONS economist says clothing prices drove inflation fall
07:51
,
Bryony Gooch
ONS chief economist Grant Fitzner said: “Inflation eased in February. Clothing prices, particularly for women’s clothes, was the biggest driver for this month’s fall.
“This was only partially offset by small increases, for example, from alcoholic drinks.”
In pictures: Rachel Reeves under pressure to deliver for the spring statement
07:47
,
Bryony Gooch
TUC General Secretary urges Bank of England to cut interest rates
07:43
,
Bryony Gooch
TUC General Secretary Paul Nowak said: “The biggest challenge facing our economy is low growth.
“After the worst slump in living standards in 200 years, households and businesses are still being hit by a sustained period of high interest rates – and it’s holding back growth.
“Evidence from around the world shows that higher growth has been facilitated by higher consumer spending and achieved alongside low inflation.
“While all eyes will be on the chancellor today, the Bank of England also has a key role to play in reviving growth. That’s why the Bank should cut interest rates at the start of next month – and continue to throughout the year.
“Lower interest rates will help ease the pressure on households, businesses and government borrowing. They will mean more money in working people’s pockets to spend on our high streets, and more money for firms so that they feel confident to invest.”
Economist says this year's budget will 'introduce inflationary pressure'
07:41
,
Bryony Gooch
Monica George Michail, NIESR associate economist, said: “Today's figures show that annual CPI inflation recorded 2.8 per cent in February 2025. Despite anticipation of a scaling back of government spending in today’s Spring Statement, this year’s budget is expansionary and will introduce some inflationary pressure.
“We forecast CPI inflation to remain above the Bank of England’s 2 per cent target throughout this year, driven by increased public spending, persistent wage growth and global trade fragmentation. We therefore think there will only be one more 25 basis point interest rate cut in 2025.”
Shadow chancellor says 'inflation remains higher than when Labour took office'
07:37
,
Bryony Gooch
Mel Stride MP, Shadow Chancellor of the Exchequer, said:“Inflation remains higher than when Labour took office, and the Bank of England expect it to rise over the coming year.
“We left Labour with inflation bang on target. But since their no-strings-attached union payouts, record tax rises and borrowing splurge, they have pushed up the cost of living.
“The Chancellor’s choices have saddled the country with higher inflation for longer. Unless she takes urgent action at her emergency budget today, working families will continue to pay the price."
In pictures: 11 Downing Street, the Chancellor's residence, ahead of the spring statement
07:34
,
Bryony Gooch
Cabinet minister seemingly confirms further welfare cuts
07:36
,
Bryony Gooch
Defence secretary John Healey seemed to confirm that further cuts to welfare spending will be required as the budget watchdog has said previously-announced measures will not save the £5 billion a year expected by 2030.
The Office for Budget Responsibility is reported to have concluded the measures will cut the bill by £3.4 billion, with Rachel Reeves expected to announce further measures to save a further £500 million.
Mr Healey told Times Radio: “That’s a calculation we may see confirmed by the Office for Budget Responsibility about the longer-term savings that our plans to change the welfare system may bring.
“That’s a must-do for any responsible government, particularly one that believes in the importance of our social security system.”
Mr Healey said: “You can’t have a benefits system that is failing people and out of control in this way.
“That’s why the plans that (Work and Pensions Secretary) Liz Kendall laid out last week, and that you’ll hear more from the Chancellor this afternoon in the spring statement, are so important.
“We want the social security system to work. It’s got to be there to support the poorest, but it’s also got to be there to make sure those who can work are able to do so.”
Q&A: Ask our political columnist anything on Reeves’ spring budget
07:30
,
Bryony Gooch
Chancellor Rachel Reeves will deliver her first spring statement today, setting out her economic plans for the UK.
With spending cuts, potential tax changes, and shifts in government priorities on the table, this announcement will have a significant impact on households and businesses alike.
The Independent’s political commentator Andrew Grice will be on hand to answer your budget questions – from its potential impact on the economy and your finances to the political ramifications.
Submit your question here.
Treasury Chief says focus is on economic stability as inflation drops
07:25
,
Bryony Gooch
Responding to the inflation figures, Treasury Chief Secretary Darren Jones said: “Our number one mission is kickstarting growth to raise living standards for working people, that is why we are protecting working people’s payslips from higher taxes.
“In a changing world, we’re focused on delivering economic stability to secure people’s finances – freezing fuel duty, protecting the triple lock and increasing the national living wage by £1,400 a year for full-time workers, while going further and faster to drive growth through our plan for change. ”
Inflation falls to 2.8 per cent ahead of the spring statement
07:23
,
Bryony Gooch
The rate of Consumer Prices Index inflation fell to 2.8 per cent in February from 3 per cent in January, the Office for National Statistics said.
The latest ONS figures come on the same day chancellor Rachel Reeves delivers her spring statement where she is expected to announce spending cuts across government departments.
Signs of easing inflation will come as good news to Ms Reeves amid efforts to reduce the cost of living.
Jabed Ahmed reports:
What time is the Spring statement?
07:01
,
Athena Stavrou
Rachel Reeves will deliver the Spring Statement on Wednesday 26 March at around 12.30pm.
Before the statement, the Office for Budget Responsibility (OBR) will publish its forecast on the UK economy.
The OBR’s forecast on 26 March will also provide estimates on the cost of living for households, and how well it thinks the government will maintain its self-imposed fiscal rules.
The chancellor will then present the main findings to parliament, delivering her plans for the economy alongside this. The opposition will be given the first response, which will likely come from Conservative leader Kemi Badenoch or shadow chancellor Mel Stride.
