Rachel Reeves will admit that “further and faster” action is needed to kickstart growth in the UK as she delivers her spring statement.
The Chancellor will give an update on her plans for the UK economy on Wednesday, as she make the first spring statement of the new Labour government.
Before the statement, the Office for Budget Responsibility (OBR) will publish its forecast on the UK economy, which is widely expected to slash its forecast for economic growth.
As she addresses the Commons on Wednesday, Ms Reeves will acknowledge she needs to do more to bolster the economy as she outlines key changes.
“Our task is to secure Britain’s future in a world that is changing before our eyes,” she will say.
“The job of a responsible government is not simply to watch this change.
“This moment demands an active government stepping up to secure Britain’s future. A government on the side of working people.
“To grasp the opportunities that we now have and help Britain reach its full potential, we need to go further and faster to kickstart growth, protect national security and make people better off through our plan for change.”
The Chancellor will also be forced to take action in order to stick to her self-imposed rule of meeting day-to-day spending through tax receipts, rather than extra borrowing. But lower-than-expected growth will lead to smaller receipts than had previously been budgeted for.
Ms Reeves will tell MPs she is proud of her record in office – despite the sluggish economic growth figures which have heaped pressure on her.
In its October forecast the OBR expected gross domestic product – a measure of the economy’s size – to grow by 2 per cent in 2025 and 1.8 per cent in 2026, but that is widely expected to be downgraded.
The Government has also borrowed more than previously expected, with the cost of those loans rising – in part due to global turbulence.
Nonetheless, Ms Reeves will say she is proud of what the government has delivered in its first nine months.
“Restoring stability to our public finances; giving the Bank of England the foundation to cut interest rates three times since the general election; rebuilding our public services with record investment in our NHS and bringing down waiting lists for five months in a row; and increasing the national living wage to give three million people a pay rise from next week,” she will say.
One announcement to be made by the Chancellor will be an extra £2.2 billion to be spent on the UK’s defence over the next year.
The extra funding is being put on the table as the Government aims to hike defence spending to 2.5 per cent of the UK’s economic output by 2027.
Ms Reeves will insist this plan, set out by the Prime Minister in February, was the “right decision in a more insecure world”, adding: “But we have to move quickly in a changing world. And that starts with investment.”
