The Spring Statement has done little to reassure markets about the Chancellor’s commitment to fiscal discipline, says Aviva’s Vasileios Gkionakis

The UK government on Wednesday announced cuts in government spending to rebuild ‘fiscal headroom’ after rising government borrowing costs and anaemic economic growth badly damaged its finances.

Chancellor Rachel Reeves says the mix of cuts in welfare benefits and departmental spending and the indirect effect of higher tax receipts will reduce the government’s total outlays by £14bn by fiscal year 2029/30. That will in turn replenish the so-called headroom to £9.9bn.

The statement was accompanied by news the Office for Budget Responsibility, the UK’s fiscal watchdog, had sliced its 2025 economic growth projection in half to one per cent, although it has increased growth forecasts for subsequent years.

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