Your monthly guide to the UK economy, giving you a monthly overview of the major trends impacting the UK's main business sectors.
Tough fiscal choices in a tough world
Scrutiny of the Chancellor had been growing ahead of the Spring Statement on 26 March, amid rising pressure on the public finances. The statement itself contained few implications for the near-term outlook, but highlighted increasingly tough choices needing to be taken on fiscal priorities, against the backdrop of an increasingly unpredictable world.
The Office for Budget Responsibility (OBR) concluded that without any action, the stability fiscal rule (i.e. day-to-day government spending being matched by revenues by 2029/30) would be missed by £4.1bn. The Chancellor managed to raise £14bn though several measures, many of which had been trailed in advance: principally welfare and planning system reforms, and lower departmental spending. Cuts to foreign aid also made room for more spending on defence (raised to 2.5% of GDP by 2027).
The net result is that the Chancellor managed to restore headroom against both fiscal rules (the second being a fall
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