FTI Consulting UK Public Affairs Snapshot: Spring Statement 2025: A new type of ‘securonomics’

Rachel Reeves’ first Spring Statement as Chancellor of the Exchequer was not the statement she would have hoped to deliver. No Chancellor likes announcing the loss of fiscal headroom and forecasts of declining growth – or indeed the policies necessary to restore fiscal balance. But many Chancellors thrive off facing difficult facts. In that vein, Reeves’ argument – that short-term pain will lead to better long-term outcomes – is a familiar one. The uncertainties are about how much pain will be needed, and when those better days can be expected to come. In the meantime, though, fiscal rectitude rules the day.   

As had been heavily anticipated, the Office for Budget Responsibility (OBR) did indeed halve its growth forecast for 2025 from 2% to 1%, and the £9.9 billion fiscal headroom announced in October has indeed evaporated. But Reeves sought to neutralise both of these disagreeable facts by pointing out that, firstly, revised OBR forecasts would see growth forecasts beyond 2026 actually increasing, and secondly, the country would return to the fiscal surplus set out in October by the end of the forecast period. 

Taking to the despatch box, the Chancellor reiterated her commitment to delivering only one “fiscal event” per year – reserving any tax changes for the Budget proper – and adhering to her own fiscal rules, ensuring day-to-day spending is not funded by borrowing and debt is falling as a share of national income by 2029.  

To reinstate the fiscal headroom “in full”, the Chancellor confirmed a package of highly trailed measures: significant welfare reforms, a renewed crackdown on tax evasion and commitments to make the state more “agile” – with the £3.25 billion public sector “transformation fund” to include investment in voluntary exit schemes within the civil service.  

In a statement that was deliberately not policy heavy, defence and planning were front and centre. Both were framed as critical measures for growth. It was a solid win to secure agreement from the OBR that the government’s planning reforms would drive housebuilding to a 40-year high and deliver tangible (and fiscally scoreable) growth. Not least for a government who has made “getting Britain building” a cornerstone of its domestic policy agenda.  

The commitment to elevating Britain to a “defence industrial superpower”, meanwhile, will play well with the party and with voters, while being difficult for any of the major opposition parties to attack in a substantive way.  

To frame today’s announcements, Reeves painted a picture of an increasingly uncertain world in which priorities have shifted. If the Autumn Budget placed blame for the gloomy economic picture at the door of the previous Conservative government, today’s statement directed attention to the global headwinds stirred up by conflict in Ukraine and President Trump’s protectionism.   

In some ways, this was a canny move from Reeves. The government is well-aware that Starmer’s mediating role between Ukraine and the United States has been one of his greatest triumphs, and projecting a vision of a responsible government focused on national security will resonate. 

Headlines will no doubt focus on the scale of the cuts – to spending and to the overall growth forecast. Yet the most perilous line Reeves and Starmer now have to tread is a political one. While this fiscal rebalancing will, they hope, keep financial markets on side for now, convincing a growing number of frustrated backbenchers that this is not austerity 2.0 is another challenge altogether. Within cabinet, too, there remain divisions on both the tone and the substance of announcements around cutting spending.  

The commitment to growth, Reeves promised today, remains steadfast. If not quite steadying the ship, today’s statement – focusing on facts and figures rather than swathes of new policy ideas – has held the line ahead of greater challenges ahead. Significant departmental spending decisions have been deferred until the completion of the Spending Review in June, and no new tax announcements will be made until the Autumn Budget.  

In the meantime, Reeves must navigate the looming threat of tariffs and a still-fragile fiscal picture domestically, knowing that further deterioration will require further surgery – all while proving that she remains the Chancellor to deliver on Labour’s election promises in a way that backbenchers and activists can enthusiastically get behind.