Chancellor delivers a spring statement strong on wishful thinking and light on compassion for those hit by cuts

Chancellor was able to point to glimmers of hope in spring statement despite economic growth forecasts being slashed

Bigger-than-forecast decline in annual rate in February is positive news for Rachel ReevesThe odds of the Bank of England cutting interest rates in May have been strengthened after inflation cooled by more than forecast last month.In a boost for Rachel Reeves on the day of her spring statement, the Office for National Statistics (ONS) said inflation as measured by the consumer prices index eased to 2.8% in February from 3% in January. Continue reading...

Chancellor reveals halving of forecast UK growth this year and extra defence spending

Rachel Reeves is delivering her economic update - here are the main points, with political analysis

Rolling coverage of the latest economic and financial news, as pound dips after February's inflation report

Caveat from statistics agency is latest sign of its problems collecting reliable economic dataBritain's main measure of wage growth may need to be revised after a large employer failed to supply earnings data on time, the troubled Office for National Statistics has warned.In the latest sign of the ONS's problems with collecting reliable economic figures, which the government uses in economic policymaking, the agency issued a caveat alongside March's average weekly earnings data that as an exception" it was working on opening up revisions further back in time" for the figures. Continue reading...

The chancellor will address MPs on Wednesday, warning of tough spending cuts amid rising government borrowing costs

It's Groundhog Day: the party may change but even under Labour, the script remains stubbornly the sameIt is time to resuscitate Margaret Thatcher's catchphrase: There is no alternative." With a twist, of course. Back then, Tina" was deployed in favour of an economic model that gave us badly distributed low growth, shambolic rip-off privatised utilities, a housing crisis and social insecurity. It is now devastatingly clear that there is no alternative to discarding this failed experiment.Yet this week, our supposedly Labour chancellor, Rachel Reeves, will take a scalpel to departmental budgets already devastated by 15 years of austerity. Our government has robbed most pensioners of the winter fuel payment, and announced 5bn worth of cuts to disability benefits, which strip support from citizens unable to independently clothe themselves, or who need an aide to use the toilet. By the time of the next election, according to the Joseph Rowntree Foundation, all households will have suffered a fall in living standards, but the poorest will be clobbered twice as hard. This, under the rule of a party founded to represent the interests of ordinary people.Owen Jones is a Guardian columnist Continue reading...

Talk of tough choices ahead, an increase in debt financing, and more initiatives to promote growthThe spring statement offers an opportunity for Rachel Reeves to talk about progress since last October's budget, the government's growth agenda and how it is attempting to raise living standards. However, the chancellor's message is likely to be defensive after being blown off course in recent months.Last year she promised no return to austerity". But after stalled tax receipts denied her the income she expected, and concerns over the global economy and Donald Trump's antics raised the UK's borrowing costs, Reeves is being forced to make cuts to stay within her budget rules. Here is what to expect from Reeves's speech, which is predicted to be relatively short at just 25 minutes. Continue reading...

Tariffs panned by economists for sowing uncertainty that they said made it challenging for businesses to plan aheadUS consumer confidence plunged to the lowest level in more than four years in March, with households fearing a recession in the future and higher inflation because of tariffs.The Conference Board said on Tuesday that write-in responses to the survey showed worries about the impact of trade policies and tariffs in particular are on the rise", adding: There were also more references than usual to economic and policy uncertainty." Continue reading...

This live blog is now closed, you can read more of our UK political coverage hereDowning Street has rejected suggestions that Britain is a freeloading" country that expects the US to meet its defence needs.At the lobby briefing this morning, the PM's spokesperson spoke at length about the contribution the UK makes to joint military operations with the Americans, following the extraordinary leak of messages showing the contempt President Trump's most senior allies have for Europe's record on defence.The account identified as JD Vance' addressed a message at 8:45 to @Pete Hegseth: if you think we should do it let's go. I just hate bailing Europe out again,'" Goldberg wrote. (The administration has argued that America's European allies benefit economically from the US navy's protection of international shipping lanes.)Goldberg continues: The user identified as Hegseth responded three minutes later: VP: I fully share your loathing of European free-loading. It's PATHETIC. But Mike is correct, we are the only ones on the planet (on our side of the ledger) who can do this.You can see, from the way in which the UK has worked closely with the US, supplying regional security and defence, our commitment to working with the US on matters of regional security.You'll know the UK provided air-to-air refuelling support for recent strikes against Houthi key rebel targets [the raid discussed in the messages inadvertently shared with Goldberg].Yes. The US is our closest ally when it comes to intelligence and defence. We have a longstanding relationship on intelligence and defence cooperation ... We will continue and continue to build on the very strong relationship we already have with the US. Continue reading...

The spring statement casts austerity as unavoidable, but Labour is clinging to economic myths while ignoring the tools of powerThe chancellor's spring statement arrives with the sombre tone of inevitability. Britain, we're told, must tighten its belt. Welfare payments for the sick and disabled will be shrunk. Public services from transport to criminal justice face leaner times. The language is that of necessity. There is no money. The choices are hard, but unavoidable. So runs the script.The idea that painful cuts are inevitable is political theatre. Either Rachel Reeves knows the constraints are self-imposed - or, more troublingly, believes they are real. LastOctober, she announced 190bn in extra spending, 140bn in additional borrowing and 35bn more in taxes than previously forecast. The Treasury view is you can't pour that amount of money into the state and call it austerity".Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...

David Murray and Bernie Evans on the alternatives open to the chancellor to tackle Britain's crumbling finances. Plus a letter from Elizabeth AtkinsonYour report says Rachel Reeves has few options left" (How did it come to this? Labour's journey from landslide victory to deep unhappiness', 22 March), but in fact she has numerous options. Patriotic Millionaires, alongside Tax Justice UK, has proposed 10 tax reforms to raise 60bn for public services. And on 18 March, it told MPs that a tax of 2% on wealth above 10m could raise 460m a week for our country's crumbling finances.Prof Richard Murphy has identified at least seven alternatives for Reeves, saying that to pretend the only options are higher taxes or austerity is wrong. And Prof Helen Goodman (Letters, 21 March) even identifies around 35bn in savings from three simple taxation reforms. Continue reading...

Rolling coverage of the latest economic and financial newsJapan's private sector output is falling this month for the first time since last October, a new poll has found, and at the fastest rate in three years.The latest poll of purchasing managers at Japanese companies shows that manufacturers were hit by worsening demand, while services companies suffered from labour constraints Continue reading...

The last thing we need from Wednesday's spring statement are incremental changes to tax and spending. Let's have a clear plan

Services companies say order books increased for first time this year as they hope to avoid Trump tariffs

Tuesday's budget will show Labor's back-to-back surpluses giving way to a decade of deficits

Irish government also hits back at accusations by US that country is operating a tax scam'

The chancellor lacks room to manoeuvre before her spring statement thanks to the cost of debt interest payments

Airline and hotel shares tumbled as substation fire shuts airport, while UK borrowing jumped more than expected

IFS says chancellor boxed in' by promises before spring statement as February figure is much worse than expected

Report co-authored by Irish government also finds tariffs could cause job losses and relocation of US multinationals

ONS, already working on fixing a survey, uncovers problems with two indices used to measure prices in economy

Chancellor may see data as vindication for spending cuts but some analysts say more radical action will be needed

Chancellor has very little headroom within her fiscal rules but is keen to keep Office for Budget Responsibility on sideWhen Rachel Reeves made her speech as shadow chancellor to Labour's annual party conference two years ago it was one of the more niche announcements that drew a cheer from the audience.Strengthening the role of the Office for Budget Responsibility might have sounded like a dry measure to unveil to the party faithful. But, after the Liz Truss debacle, handing the Treasury watchdog more powers went down a storm in Liverpool. Continue reading...

Despite the decision to hold at 4.5%, businesses and households can take a confident view of the UK's prospects

Payments by OECD countries outstrip amount spent on defence, police services and housing, report finds

Rate-setting committee also points to mounting global uncertainty as it pauses its cycle of reductions

Unemployment was level in January, but has risen over the past six months

Officials raise inflation forecast to 2.7% this year, as Fed chair Jerome Powell says uncertainty is remarkably high'Officials at the US Federal Reserve cut their US economic growth forecasts and raised projections for price growth as they kept interest rates on hold.Uncertainty around the economic outlook has increased," the central bank said in a statement, as Donald Trump's attempt to overhaul the global economy with sweeping tariffs sparks concern over inflation and growth. Continue reading...

A groundbreaking vote by outgoing MPs has given the chancellor-elect, Friedrich Merz, the chance to renew mainstream politicsThe first grand coalition" government in Germany's postwar history was formed in 1966 to address an unexpected economic downturn, amid concerns over a nascent neo-Nazi far right. Nearly six decades later, as the Christian Democratic Union (CDU) and the Social Democratic party (SPD) prepare to join forces across the right-left divide for the fifth time, following February's snap election, the circumstances are superficially similar. The scale of the challenges, however - and the sense of jeopardy - are of a different order.As geopolitical events have undermined its tradeled business model, the German economy has been undergoing the most prolonged period of stagnation since the second world war. Not unrelatedly, the extreme-right Alternative fur Deutschland (AfD) party - elements of which are judged a threat to the democratic constitutional order by security services - has risen in the polls to become the second-biggest party in the EU's most powerful member state. At the same time, a Putin-sympathetic Donald Trump is dismantling the transatlantic security guarantees on which Germany has relied in the postwar era.Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. Continue reading...

Rolling coverage of the latest economic and financial news

Rolling coverage of the latest economic and financial news, as gold hits $3,027 per ounceGold is continuing to hit new heights this morning - it's now trading at $3,027 per ounce.In the current environment, every day seems to offer a new catalyst for the gold price," comments Kathleen Brooks, research director at XTB.In uncertain times, central banks and individuals demand gold, while inflation concerns emanating from President Trump's tariffs and trade war are also boosting the price of gold.Life above $3,000 per ounce could be the norm for the gold price in 2025, it is already higher by 15% YTD, easily outpacing gains for global equities. Continue reading...

Warning lights are flashing on a dashboard of economic indicators as analysts grow alarmed about a Trumpcession'Prospects for the US economy have cooled significantly in a matter of months. After outperforming its international peers last year, warning lights are flashing on a dashboard of economic indicators as analysts warn that Donald Trump's erratic approach is hitting the world's largest economy.Fears of a US recession this year are growing, in what is being called a Trumpcession", amid a sharp decline in business and consumer confidence as the president threatens punitive import tariffs on US allies and enemies alike. Continue reading...

Pulled pork replaces oven-ready gammon joints, and local newspaper adverts are out on ONS list

Despite the government pledging extra funds and one hole being filled every 18 seconds, motoring groups say situation looks bleak' for driversThe cost of fully fixing the pothole-plagued local roads of England and Wales has reached a new high of almost 17bn, according to the latest industry report.The record sums required come despite increased government funds to target road repairs - and one pothole being filled every 18 seconds. Continue reading...

Crude prices lifted by US-Houthi attacks, as City watchdog decides to fine Crispin Odey 1.8m and ban him from the UK financial services industry for a lack of integrity'

Charlie Bean says OBR forecasts are flaky' and cautions against trying to hit targets five years awayThe former Bank of England deputy governor Charlie Bean has warned the chancellor against making kneejerk cuts in next week's spring statement to try to hit fiscal targets that are five years away.Rachel Reeves is preparing to slash spending, including on disability benefits, in response to weaker forecasts from the independent Office for Budget Responsibility (OBR) - prompting a backlash from within her own party. Continue reading...

Economic organisation downgrades forecasts for growth in UK as well as US, Canada and Mexico due to tariffs

Vacancies increase in building sector after low levels of activity in recent months amid economic uncertaintyVacancies have increased in the construction industry as well as for gardeners, teachers and maintenance workers, according to a new report.Research by the Recruitment and Employment Confederation (REC) and data firm Lightcast showed a recent fall in demand for veterinary nurses, delivery drivers and train and tram drivers. Continue reading...

Painting a veneer of morality over welfare cuts risks people fighting a tougher battle for support they needThe assessment process itself is awful." Carol Vickers receives the personal independence payment (Pip), the disability support benefit whose spiralling cost the government is determined to cut back.She has a debilitating condition called Ehlers-Danlos syndrome that affects her connective tissues, and means she needs an assistance dog. I spoke to her this week, to get a sense of how those at the sharp end of the looming changes may be feeling. Continue reading...

A trade war could push up inflation when both the UK and US economies really need cheaper borrowing. So what's a central bank to do?Monetary policymakers on both sides of the Atlantic will be considering how seriously to take Donald Trump's threats of an all-out trade war as they give their verdict on the path of interest rates this week.The Federal Reserve, the US central bank, will examine the prospect of a Trumpcession" brought on by tariffs that send import costs rocketing and convince consumers, already shellshocked from the cost of living crisis, to stop spending. Continue reading...

Russia has pushed Europe into a quasi-Keynesian approach to the defence budget. Only Britain insists on cutting help to the sick to pay for securityAs the president of the US provokes trade and economic chaos at home and abroad, an American tells a British friend of mine: At least your political system removed Truss; we are landed with Trump for fouryears."Unfortunately, when it comes to the worldwide damage being wreaked by Trump and his cronies, the we" applies to all of us. Continue reading...

Treating disabled and sick people callously flies in the face of all the party stands for - the government must rethink its plans

The president's chaotic policy on import duties makes planning impossible, says the CEO of a Kentucky distillery - and state Republicans are unhappy, tooBrough Brothers Distillery is in the midst of a big expansion. A fifteen minutes' drive from its small distillery in the West End neighborhood of Louisville, Kentucky, workers are toiling away on its new site, seven times the size of the old one, in the heart of Bourbon City.This has been a long time coming for Brough Brothers, which opened its first location in 2020 and had drawn up ambitious plans for international growth in 2025. Then Donald Trump returned to power. Continue reading...

Calls for chancellor to exclude defence from rules or raise taxes in response to spending pressure at spring statementLeading economists are urging Rachel Reeves to bend her fiscal rules or raise taxes instead of cutting welfare when she responds to growing spending pressures in her spring statement later this month.The independent Office for Budget Responsibility (OBR) is expected to downgrade its forecasts for the UK when they are published on 26 March, wiping out the headroom to meet the chancellor's rules. Continue reading...

UK economy unexpectedly contracts by 0.1% in January in blow to the chancellor ahead of spring statement; Friedrich Merz declares: Germany is back'Let's look at the GDP figures in more detail.The 0.9% drop in production output in January, which came after 0.5% growth in December, was mainly caused by a 1.1% slump in manufacturing while mining and quarrying also declined. Basic metals and metal products were down along with pharmaceutical products. Continue reading...

ONS data showing 0.1% fall in GDP in January comes less than two weeks before chancellor's spring statement

GDP goes in wrong direction as chancellor puts final touches to fiscal plans