Rachel Reeves didn’t want today’s Spring Statement to be seen as a budget, but a budget it has turned out to be. The Chancellor has had to find £15 billion of spending cuts across welfare and the rest of government. Rising borrowing costs at the start of the year chipped away at her headroom and the Office for Budget Responsibility (OBR) has now confirmed that the £10 billion margin she left herself in the autumn was wiped out. Had the Chancellor not acted today she would have broken her ‘ironclad’ fiscal rule by more than £4 billion – a £14 billion swing since the Budget.
The spending cuts Reeves has just announced recover that headroom, leaving her with £9.9 billion at the end of the forecast period – a very small margin for error. ‘The Chancellor has learned nothing from the failure to provide enough headroom at her first Budget’, said shadow business secretary Andrew Griffith.
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