Mark Drakeford MS, Cabinet Secretary for Finance and Welsh Language
Today, Chancellor of the Exchequer, Rachel Reeves, presented the UK Government Spring Statement, including the Office for Budget Responsibility’s (OBR) new forecast for the UK economy and public finances. This sets the fiscal envelope for the UK Spending Review, which concludes in June.
The Statement recognised the ongoing challenging fiscal position facing the UK, which has been exacerbated by international factors. Since the Autumn Budget, the global economic backdrop has deteriorated. There is no shortcut to economic growth, and it will take time for the changes the UK Government has implemented to make a difference.
The Chancellor reported that the challenges facing every economy mean the OBR has had to revise down its growth forecast for this year concluding that, mainly because of higher interest rates caused by external events, the Chancellor’s fiscal targets would not have been met unless action was taken in the Spring Statement. This action continues the UK Government’s efforts to restore stability to the UK public finances .
The Chancellor’s Statement emphasised that, despite the need to revise down the growth forecasts for this year, the OBR has upgraded its growth forecast for next year and every other year of the forecast, meaning that, at the end of the reporting period, the economy will be larger than forecast in the autumn. Households will be £500 better off on average by the end of March 2030, with inflation also forecast to fall to the Bank of England’s 2% target by 2027, and interest rates already cut on three occasions since the General Election.
The Welsh Government will receive an additional £16m in 2025-26 as a result of changes announced today, building on the £1.6bn increase in our funding confirmed at the Autumn Budget.
Wales will also benefit from announcements made by the Chancellor today, including in respect of confirmation of the defence spending uplift, funding to support public sector transformation and additional funding for employment support and job centres. We also welcome the continued commitment from the Chancellor to provide additional capital investment across the Spending Review period, over and above the increases announced in October.
We will continue our discussions with the UK Government about opportunities for Wales to contribute to economic growth as we approach the conclusion of the UK Spending Review in June. These include greater rail investment, including to deliver enhancements to the Core Valleys Line; our coal tips safety programme, which will create jobs, upskill the workforce, bring land back into use and encourage the development of new technologies; and additional budget flexibilities, to support investment across all parts of Wales.