Wed Mar 26 16:39:18 UTC 2025: ## UK Chancellor Announces Deep Welfare Cuts to Tackle Public Finances

**London, March 26, 2025** – UK Chancellor of the Exchequer Rachel Reeves announced a £14 billion package of austerity measures aimed at shoring up the nation’s public finances. The plan includes deepening previously announced cuts to disability and sickness benefits, totaling an additional £4.8 billion in savings. This follows the government’s initial welfare cuts, which fell short of projected savings by £1.4 billion according to the Office for Budget Responsibility (OBR).

The announcement comes as the OBR halved its growth forecast for 2025 to 1%, citing increased global uncertainty and higher borrowing costs. While Reeves emphasized the need to support those unable to work, she argued that reforms to benefits such as Personal Independence Payments (PIP) and Universal Credit are necessary. She reiterated the government’s commitment to not raising taxes but pledged to crack down on tax evasion, aiming to raise £1 billion. Further savings of £3.4 billion are projected through planning and other reforms by 2029-30.

The Chancellor also confirmed a previously announced increase in defence spending to 2.5% of GDP by 2027, a half-percentage-point increase, with a £2.2 billion downpayment in the next fiscal year. This increase, funded by cuts to foreign aid, follows pressure from US President Donald Trump for European nations to increase their contributions to Ukraine’s defense.

Concerns were raised in Parliament regarding potential concessions to President Trump and Elon Musk, particularly regarding the digital services tax and online safety legislation. The OBR also warned of a potential 1 percentage point drop in peak GDP by 2029 if the US were to impose a 20% tariff on the rest of the world, highlighting the uncertainty surrounding ongoing trade negotiations between the UK and US.

Read More