Chancellor Rachel Reeves confirmed cuts to welfare spending as she pledged to secure Britain’s future with the world ‘changing before our eyes’, but she proposed no further tax hikes in her spring statement on Wednesday.

Addressing the House of Commons, Reeves said Labour was ‘elected to bring change to this country and deliver a decade of national renewal’.

She was ‘proud of what we have delivered in nine months’ and now the task is to secure Britain’s future with the world ‘changing before our eyes’.

The global economy has become ‘more uncertain’ and this demands an active government, one that ‘steps up, not steps back,’ she said.

Reeves said the Office for Budget Responsibility’s updated forecasts showed a government deficit of £4.1 billion by fiscal 2029-30.

The OBR is the independent public finances watchdog for the UK, which produces the official forecasts for the economy and public finances used by the chancellor.

Reeves said actions taken Wednesday would restore the fiscal headroom in full, moving from a deficit of £36.1 billion in fiscal 2025-26 before moving into surplus of £9.9 billion in fiscal 2029-30.

Reeves said increased global uncertainty has hit public finances and the economy and added her fiscal rules are ‘unnegotiable’.

‘British people have seen what happens when the country borrows beyond its means,’ she claimed.

However, Reeves said there would be no further tax hikes in the spring statement.

She said further measures to tackle tax avoidance and fraud would raise a further £1 billion, relative to measures already announced in October.

But she did confirm cuts to welfare spending, which the OBR estimates will save £4.8 billion.

She confirmed increases to defence spending and announced a raft of new projects in the sector.

The OBR halved its estimate for economic growth to 1.0% in 2025 from 2.0%.

Inflation will average 3.2% in 2025, Reeves said, compared with the OBR‘s previous forecast of 2.6%. It will then average 2.1% in 2026, and return to the Bank of England’s 2% target in 2027.

Ahead of the statement Prime Minister Keir Starmer said the government is ‘going further and faster on the economy’.

The Labour administration is creating ‘jobs and opportunities’ for people and ‘securing Britain‘s future’, he told the House of Commons during prime minister’s questions.

The pound traded at $1.2906 compared with £1.2891 shortly before Reeves’ statement. It had earlier weakened after soft inflation figures.

The FTSE 100 index was up 22 points compared with a gain of 23 points before, but the yield on the UK 10-year bond widened to 4.78% compared with 4.74%.

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