Getty images“Certainly not a budget” is the original message emerging from the Treasury about Wednesday’s economic statement.
There will be no red box outside number 11, only the “thin book” of new policies, in which no other tax grows, in which there will be no other tax.
So what does this spring statement mean?
This is mainly predicted spring from the office of budget responsibility (OBR) of the official forecasts of the government. In that process, it had to take into account the slow economy and high government lending costs than expected.
This OBR forecast has wiped the room for maneuver against the “non-parasical” rules, Chancellor Rachel Reavs set on the government’s borrowing in the future. He has made several more adjustments to keep the numbers on the track.
The compulsory low increase and high lending costs have blown the budgetary number into the course.
We will hear a lot from Chancellor how “the world has changed”.
The reality is that there is a possibility of improving this course that President Trump would be required before changing global diplomacy and business.
On Wednesday, we will find out that Chancellors can continue to rule to resort to tax growth even in this “changed world”.
And if there is no return to do penance, where does the money come from?
Although no significant tax measures are expected, the Chancellor may leave the option on the table for autumn budget.
Some economists expect tax growth in autumn, especially to meet increasing defense spending. There is talk of “interaction with the public” on this matter.
In his first budget, the Chancellor rejected, for example, extended the Conservative Freeze by one and two years in the Income Tax Threshold. If it is back as an alternative, the public may find a clear idea around this spring statement.
£ 5bn welfare expenses cut The largest single welfare cut for a decade already declared is the cut. This is likely to be the biggest savings.
On Wednesday, individual freedom payments (PIPs) and the number of people losing universal credits, on average, and the division between the current or future recipients have been detected. Hundreds of thousands of people will lose benefits related to thousands of pounds.
Civil service administrator costs £ 2.2BN are cutWith staffing from 2029–30. 15% is an important part of the cut that is spent by the Central Government on wages and advisors.
However, the Chancellor suggested losses of 10,000 roles, sorting the workforce of over half a million – especially it sees 30–40,000 liver every year.
Unions say this cannot be done without damaging front line services. There is a lot of ride on the deployment of automation and artificial intelligence.
Another partial trim for increase in departmental budget, a crack when avoiding tax, and switch to the defense spending should all help all the Chancellor’s room restore for maneuver by another pound.
Given the initial injection of significant upfront amount in public spending in the budget, it will be difficult to mark it as “penance”.
Completing the increase in defense spending will be a major feature of the spring statement.
Defense spending (eg, on jets and tanks) is more capital intensive than assistance expenses, so it is given more exemption from the Chancellor’s self-looked borrowings, which is raised only in taxes to limit the expenses of day-to-day.
Decline
In 2025, an OBR forecast for the economy will be greatly focused on a chunky downgrade.
The real question for the Chancellor is to what extent to the end of the forecast period, and therefore dent the economy and tax revenue permanently. This may not happen, and therefore does not affect the budget numbers a lot.
Treasury is also trying to get OBR to credits development-growing reforms like planning change.
In principle, high growth means less forecast borrowing and more room for maneuver – a win -win. But OBR may be strict on this after a recent external review of its methods.
There is a big picture about development and government strategy here. Investors and business are still awaiting the infrastructure, industrial and business strategies of this government, as it was in power.
The new global reality means further uncertainty, but also makes a stable, rule-based advanced economy with state-of-the-art, research and financial services.
This is especially a case for a nation that can simultaneously maintain its trade and investment connections with America, Europe, China and Gulf, even between tariff tumors. In the cabinet, they call it “the most associated economy in the world”.
Is the world listening to this? The UK government has increased the cost of lending again as the markets are waiting for the new calendar of bond sales on Wednesday.
The UK bond yield increased with the US in January, but when it stopped, they grew in line with Europe even after a large-scale debt-fumed rearmament schemes. It is the worst in both the world for borrowing forecasting.
The spring statement may be an opportunity to project the opposite case – that the UK is specificly placed to be the best of both worlds. Some types of economic deal with the US is adjacent, and negotiations on Brexit Reset are also progressing.
There are some small signs of the economy that are exiting its recent rote, especially in the service sector. Small businesses in retail and hospitality are out for some type of pain that are afraid of growing for national insurance and national living wages.
So on Wednesday, while certainly not a budget, will answer some important questions about the economy.
