Growth forecast for 2025 slashed as Reeves promises at least 1.3m homes
- Economic Forecasts: The OBR cut the 2025 growth forecast from 2% to 1% and raised the end-2025 inflation forecast from 2.6% to 3.2%. Inflation is expected to hit the Bank of England’s 2% target by 2027.
- Housing and Planning: Changes to the planning framework aim to build 1.3 million homes across the UK by 2029, close to Labour’s 1.5 million target (though the latter applies to England alone).
- Defence and Spending: Defence spending will rise to 2.5% of GDP by 2027, with an immediate £2.2 billion uplift for 2025/26. Capital spending will increase by £2 billion annually, focusing on growth and defence.
- Tax and Welfare: Efforts to combat tax fraud aim to raise £7.5 billion. Welfare reforms will save £3.4 billion, with Universal Credit allowances increasing but health elements being cut and frozen for new claimants.
- Public Services and Efficiency: A £3.25 billion Transformation Fund will streamline public services, reducing government running costs by 15%.
- Fiscal Rules: Reeves projects a shift from deficits in 2025-27 to surpluses by 2027-30, meeting the “stability rule” two years early.
The statement reflects a mix of cautious optimism and targeted reforms.
