UK growth cut for 2025 – but upgraded for remainder of Parliament says Chancellor in spring statement

The UK’s growth has been cut for 2025 from 2% to 1% by the Office for Budget Responsibility, the Chancellor Rachel Reeves has said.

But the watchdog has said that although it has downgraded this year’s growth, every year after 2025, up to 2029, has been upgraded.

Growth is expected to be 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.

Real household disposable income per person is expected to grow by an average of 0.5 percentage points from 2025/26 to 2029/30, with stronger wage growth and inflation beginning to fall.

Ms Reeves announced that the health element of Universal Credit will be cut by half and frozen for new claimants.

The Universal Credit standard allowance will increase from £92 per week to £106 per week by 2029/30.

The chancellor confirmed the government’s plans to spend 2.5% on defence by 2027, with the Minsitry of Defence receiving an extra £2.2 billion next year.

No further tax increases were announced.