Britain's finance minister Rachel Reeves is set to detail billions of pounds of spending cuts in her Spring Statement on Wednesday to address the country's ailing public finances.The spending update comes as the Labour government, elected in July after a landslide election win, faces sluggish economic growth and rising borrowing costs.In a glimmer of good news, Britain's annual inflation rate eased to 2.8 percent in February, down from 3.0 percent in January, according to the Office for National Statistics.But despite the slowdown, inflation remains elevated above the Bank of England's two percent target. The central bank kept interest rates unchanged last week after a series of cuts, warning of "economic uncertainty".Reeves has warned that since her inaugural budget in October, "the world has changed. "Heightened global uncertainty over US tariffs and the war in Ukraine have added to the UK's economic woes, chipping away at the Labour government's £9.9 billion ($12.8 billion) fiscal cushion.Prime Minister Keir Starmer has recently pledged to hike spending on defence, with the government announcing late Tuesday a £2.2 billion boost next year. "This moment demands an active government stepping up to secure Britain's future," Reeves said in a press statement ahead of the fiscal update.An advocate of iron discipline over public finances, Reeves is set to detail cuts to welfare payments and government departmental budgets in Wednesday's highly-anticipated update.An accompanying forecast from the Office for Budget Responsibility, the country's spending watchdog, is expected to paint a gloomy picture of the outlook for the UK economy. "The Chancellor (Rachel Reeves) is unlikely to announce much today that will help quell the fears around the UK economy," commented Lindsay James, investment strategist at wealth management firm Quilter.

Source: The Times March 26, 2025 22:02 UTC