By Burak Bir
LONDON (AA) - Britain's economic growth projection for 2025 has been revised to 1% in a spending update, the Treasury chief said Wednesday.
Chancellor Rachel Reeves began her Spring Statement to lawmakers in the House of Commons by setting out the government's mission and noting some of its achievements.
She said global instability is affecting growth across the world, and admitted that the cost of living crisis in the UK is still very real.
Reeves noted that the government "must work closely with the Bank of England" to support the independent monetary policy committee to meet its 2% inflation target.
She said OBR (Office for Budget Responsibility) forecast inflation will average at 3.2% this year, before falling rapidly to 2.1% in 2026 and meeting the 2% target from 2027 onwards.
"Earlier this month, the OECD (Organization for Economic Cooperation and Development) downgraded this year's growth forecast for every G7 economy, including the UK and the OBR have today revised down our growth forecast for 2025 from 2% in the autumn to 1% today," she said.
Reeves stressed that she is "not satisfied with these numbers," and it is why the government is serious about taking action needed to grow the UK economy.
She also said that the budget will move from a deficit of £36.1 billion ($46.5 billion) in 2025 - 2026 and £13.4 billion in 2026 - 2027, to a surplus of £6 billion in 2027 - 2028, £7.1 billion in 2028 - 2029 and £9.9 billion in 2029 - 2030.
The defense budget will get a £2.2 billion boost in 2026, paving the way for spending to hit 2.5% of GDP.
The chancellor underlined that the country needs to spend more on defense, and repeated her refrain that the Labour Party is "going further and faster" on the issue.
"This government will ensure that every pound we spend will deliver for the British people by increasing productivity, driving growth in our economy and improving our front-line public services," she added.