Chancellor Rachel Reeves is set to update MPs on the state of the UK economy and make a range of economic policy announcements on Wednesday afternoon at the Spring Statement. She is also set to give updates on the government’s plan to go “further and faster” on delivering growth. The Spring Statement will come as the Office for Budget Responsibility (OBR) releases its new forecasts for the UK economy. Tax rises are not expected to be announced but the Chancellor has indicated that up to £10bn of cuts will be made to public spending. Here is all you need to know about the Reeves’ Spring Statement and new forecasts by the OBR. What is the Spring Statement? The Spring Statement is an update on the state of the UK economy and it will be delivered by Chancellor Rachel Reeves. The Chancellor will also respond to new forecasts made by the Office for Budget Responsibility (OBR). The annual statement is one of two major fiscal events led by the Chancellor. But the government has played down the importance of the Spring Statement and insisted that it is not equal to the Autumn Budget, during which major policy announcements were made, after Labour promised in its manifesto to deliver only one “major fiscal event” per year. At the last Autumn Budget, Reeves announced increases to employers’ national insurance contributions (NICs), inheritance tax and the national minimum wage as she set out to raise as much as £40bn for extra spending on the NHS and education. Former Chancellor Jeremy Hunt used his Spring Statement in 2024 to cut national insurance paid by workers and extend freezes on fuel and alcohol duties. When is the Spring Statement? The Spring Statement will be delivered at around 12.30pm to MPs in the House of Commons. It will follow the usually weekly session of Prime Minister’s Questions (PMQs) between Sir Keir Starmer and Kemi Badenoch. You can watch it live on the BBC, Sky News, YouTube and the Parliament website. Will taxes go up? The Chancellor is expected to make small policy announcements at the Spring Statement and confirm recent briefings. Defence and national security investment is likely to take centre stage after the Prime Minister said the international aid budget would be cut to fund a rise in defence spending to 2.5 per cent of GDP from April 2027. Reeves and Treasury officials have ruled out tax rises. It means government spending cuts will be confirmed. Some 10,000 civil service jobs will be wiped out while welfare reforms will mean the government makes savings of around £5bn. These cuts in public spending are likely to total more than £10bn in order for Reeves to fill a fiscal hole left by slower-than-expected growth and spiralling borrowing. Work and pensions secretary Liz Kendall said the changes to benefits would encourage Brits to return to the workforce, but they have sparked criticism from some Labour MPs over the impact on constituents. Reeves has already said that £2bn in grant funding will go towards building homes, with funding going towards training courses and apprenticeships in the construction sector. Despite further tax rises getting ruled out, an extension to the freeze on tax thresholds has been suggested by various Westminster watchers. Tweaks to the two per cent Digital Services Tax could also be made to fend off tariff threats made by US President Donald Trump. A reduction in the annual limit to tax on tax-free cash ISAs to £4,000 had been suggested as a possible policy but more recent reports say she will delay reforms to savings accounts. A ‘rabbit out the hat’ moment can never be fully ruled out in fiscal events such as these, but surprises are highly unlikely. What is the Office for Budget Responsibility (OBR)? The Office for Budget Responsibility (OBR) is the UK’s independent fiscal watchdog and monitors the Chancellor’s plans for growth. It releases forecasts for the UK economy during the Spring Statement and Autumn Budget every year. It also provides analysis of the UK’s public finances and releases separate reports throughout the year. Its measures are crucial to the Treasury’s calculations on government spending, taxes and borrowing. It was founded under the Conservative-Liberal Democrat coalition government in 2011 in the aftermath of the financial crash. Governments use the OBR’s forecasts and analysis to predict spending and borrowing trends. Investors and traders also use OBR reports to check whether the government’s financial plans are sound. Chancellor Rachel Reeves has set clear fiscal rules which she is unlikely to break. The OBR is led by a committee of three economists. Richard Hughes is the OBR’s chair. He was previously the Chief Economist at the Treasury and worked at the think tank Resolution Foundation. Professor David Miles and Tom Josephs are the other two members on the committee. Members are appointed by the Treasury with the agreement of the Treasury Committee. The OBR also has an advisory panel and an oversight board. What are Rachel Reeves’ fiscal rules? Chancellor Rachel Reeves has set strict restrictions on spending that prevents her from making unfunded commitments. She has set a ‘stability rule that says day-to-day costs are matched or outweighed by revenues by the end of parliament. It means that a surplus must be achieved by her 2029-30 deadline and excessive borrowing is curbed. Reeves left a surplus of about £9.9bn for 2029-30 at her Autumn Budget but many economists believe that headroom has been wiped out. Her rule also says that a current budget balance is achieved when there is a surplus or deficit within a margin of 0.5 per cent of GDP. Her other rule says that net financial debt (public sector net financial liabilities or PSNFL) should fall as a share of GDP by the end of the parliament. This measure adds up all the debt and assets within public sector net debt. It also accounts for other liabilities such as pension obligations. There is also a cap to welfare spending but it excludes some types of payments such as pensions and jobseekers’ allowance. Reeves also strengthened the OBR’s powers last year as a law was passed that prevents the fiscal watchdog from getting sidelined in any spending decision worth more than one per cent of UK GDP. It means the OBR will be informed of any major fiscal announcement and subsequently publish an analysis of it. What will the OBR forecast for the UK economy? The OBR is widely expected to halve its UK growth forecast for 2025 to about one per cent. Its previous estimate said the UK economy would grow by around two per cent this year. Its revision is expected to still be higher than the Bank of England’s February forecast, which predicted the UK economy to grow by 0.75 per cent. The OBR also previously said inflation could reach as high as 2.6 per cent this year. There is no confirmation yet on what the OBR’s new estimate will be but the Bank of England recently predicted that inflation could reach 3.75 per cent this year. Recent forecasts and reports by the likes of the Bank of England and the OECD have noted the risks of President Trump’s tariffs to the UK economy. When will the OBR release its report? The OBR will publish its economic and fiscal outlook report as soon as the Spring Statement has ended. Chancellor Rachel Reeves is expected to make several references to the OBR’s report and forecasting during her speech to Parliament. What is the current state of the UK economy? UK growth has been sluggish and inflation is still higher than the Bank of England’s target of 2 per cent. The Office for National Statistics (ONS) said the UK economy shrank by 0.1 per cent in January, which was lower than forecasters had predicted. There was a small expansion of 0.2 per cent in the three months leading up to it. Inflation hit three per cent in January and new figures for February will be revealed hours before the Spring Statement. Wage growth has also remained high as it rose by 5.9 per cent between November 2024 and January 2025, while unemployment remained at 4.4 per cent. UK borrowing has also overshot expectations. Figures released by the ONS said the government borrowed £10.7bn in February. This was billions higher than an estimate given in a previous OBR forecast. The UK’s deficit also hit £132.2bn in the financial year to February. Where can I watch the Spring Statement? Viewers can tune in to the Spring Statement on Parliament TV. News television channels will also broadcast and stream the Spring Statement.