In the News Teaching Activity – did the Spring statement address the UK’s economic problems? (Apr 2025)

With economic pressures mounting, has the Chancellor Rachel Reeve’s Spring Statement introduced the fiscal reforms necessary to address the UK's economic issues?

The UK’s macroeconomy is grappling with multiple challenges. Economic growth has stagnated, with just a 0.1% real GDP rise in Q4 2024, followed by a 0.1% contraction in January 2025. CPI inflation eased to 2.8% in February but remains above the 2% target. Unemployment has edged up to 4.4%. Economic inactivity remains elevated compared to pre-COVID levels, with 1 in 8 young people not in employment, education, or training (NEETs). Meanwhile, the UK’s current account continues to run a deficit. Brexit has further strained international trade, with recent research indicating a 5% decline in total trade with the EU and an additional £37bn per year in UK business costs. The long-term impact of Brexit has slowed economic growth, resulting in an estimated £40bn annual shortfall in tax revenue—funds that could have been allocated to public services or reducing government borrowing. Globally, the Trump administration’s erratic economic policies have spray-painted economies with uncertainty, further complicating the UK’s economic outlook. Amid these challenges, the Bank of England recently held the base interest rate steady at 4.5%.

Spring Statement 2025: Key points at a glance - BBC News

1. What were the key announcements in the Spring Statement?

2. Why has the forecast for UK economic growth been cut in the short run but increased in the longer term?

3. Discuss the extent to which the Spring Statement’s fiscal policy changes may help strengthen the UK economy.