Wednesday, 26 March 2025
UK Chancellor Rachel Reeves delivered her much anticipated Spring Statement earlier today.
Dr Christopher Byrne, Assistant Professor in British Politics, in the University of Nottingham’s School of Politics and International Relations, reacts to the announcement.
“Chancellor Rachel Reeves today announced cuts to disability benefits amounting to some £5bn and a range of other measures to try to balance the books after her £10bn cushion in the public finances was wiped out by slower economic growth and higher borrowing costs.
“To say this is a bad look for a Labour Chancellor would be an understatement. It was never supposed to happen, so why has it? The Chancellor pointed to the turbulence caused by the new Trump administration’s tariff policies, and rising borrowing costs for government debt around the world. That, along with the need to stick to her fiscal rules, which require day-to-day government spending be fully financed by tax revenues by 2029–30, helps explain the shift.
This is an incomplete picture though. The reality is that Britain is less exposed to the Trump tariffs than many other countries, as it is not a major exporter to the US.
"Furthermore, the real constraint on further borrowing is not the Chancellor’s rules, but the simple fact that international markets no longer view the UK as creditworthy enough to borrow to at low cost. For example, while Germany pays 2.8 per cent on 10-year bonds, the UK has to pay 4.8 per cent.
“Ultimately, the real problem is that the UK’s economic model, predicated on low inflation and low interest rates, is no longer working and the Labour government has not yet found a viable new one. The ‘Securonomics’ agenda touted by the Chancellor prior to entering government only works with massive public investment, but where is that supposed to come from if there are no easy solutions when it comes to taxing more, borrowing more or growing the economy?”
Notes to editors:
About the University of Nottingham
Ranked 24 in Europe and 15th in the UK by the QS World University Rankings: Europe 2024, the University of Nottingham is a founding member of Russell Group of research-intensive universities. Studying at the University of Nottingham is a life-changing experience, and we pride ourselves on unlocking the potential of our students. We have a pioneering spirit, expressed in the vision of our founder Sir Jesse Boot, which has seen us lead the way in establishing campuses in China and Malaysia - part of a globally connected network of education, research and industrial engagement.
Nottingham was crowned Sports University of the Year by The Times and Sunday Times Good University Guide 2024 – the third time it has been given the honour since 2018 – and by the Daily Mail University Guide 2024.
The university is among the best universities in the UK for the strength of our research, positioned seventh for research power in the UK according to REF 2021. The birthplace of discoveries such as MRI and ibuprofen, our innovations transform lives and tackle global problems such as sustainable food supplies, ending modern slavery, developing greener transport, and reducing reliance on fossil fuels.
The university is a major employer and industry partner - locally and globally - and our graduates are the third most targeted by the UK's top employers, according to The Graduate Market in 2024 report by High Fliers Research.
We lead the Universities for Nottingham initiative, in partnership with Nottingham Trent University, a pioneering collaboration between the city’s two world-class institutions to improve levels of prosperity, opportunity, sustainability, health and wellbeing for residents in the city and region we are proud to call home.
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