Gabriela Pomeroy
Live reporter

Image source, Reuters

Today we've been digesting all the news from Chancellor Rachel Reeves' Spring Statement. Growth forecasts are down, benefits are being cut and defence spending is going up.

And on top of all that, US President Donald Trump wants to impose 25% tariffs on car imports and car parts. The government is in talks to fend off these tariffs, but the Office of Budget Responsibility (OBR) is warning that becoming embroiled in a trade war could undo the £9.9bn headroom Reeves has built into the economy.

The chancellor says that people will be better off under her economic plan, and argues that coming changes to Personal independence Payments (Pip) will help get people back to work.

Could taxes go up?

Some top economists think the government might have to raise taxes later in the year, if the economy and public finances get worse. The Institute for Fiscal Studies is warning that the chances of Reeves meeting her fiscal rules are "a coin toss" and says there's a "good chance" that the economic forecast will "deteriorate".

Benefits claimants worry for their future

We've been hearing from people who fear the coming cuts to welfare announced yesterday. One caller to the BBC's 5Live earlier today told us disabled people were being "scapegoated" by coming cuts to Pip.

We're pausing our live coverage for now - but you can read more about the Spring Statement.

Henry Zeffman
Chief political correspondent

Reeves is facing questions today about her approach.

Yesterday she announced extra benefits cuts - more than what was announced before. That has deepened the anger among some Labour MPs who were already annoyed about welfare cuts, though it didn't necessarily broaden the anger.

But there is unease among MPs. There isn't a sense that things will start to improve for their constituents.

The reality is it's not just up to the chancellor how people are experiencing the economy.

Reeves spoke a lot yesterday about uncertainty. What she really meant by that was Donald Trump. Within six days we might see the US president impose new tariffs on the UK and that could massively affect the economic picture here.

Even if he doesn't impose tariffs on the UK, but he does on other countries, that could affect the UK economy.

Looking ahead to the Autumn Budget, the questions are going to get louder and louder about whether the chancellor's approach to taxes is the right one - and whether she night have to come back for more.

Image source, EPA

Returning briefly to the other big economics story of the day, we've been hearing from the chair of the Commons Business and Trade Committee on the potential fallout of Donald Trump's decision to impose sanctions on car imports.

Labour MP Liam Byrne tells BBC Radio 4's World at One programme the UK is not the main target of the tariffs, as there is "balanced trade" and shared interests with the US.

He goes on: "We are in a different position to Europe. I think the Germans in particular were probably the real focus of the president's ire."

Byrne says the UK government needs to strike a deal with the US to "shield our carmakers" but warns those efforts could fail because of a lack of "reason" in Washington.

"Then and only then do we weigh our response and potentially a reprisal," he adds.

Confused by the ongoing tariffs row? We've tried to explain how it works and what it means.

Kevin Peachey
Cost of living correspondent

Peter Moss, from Exeter, wants to know why Rachel Reeves did not mention either alcohol or fuel in yesterday's Spring Statement.

The chancellor was at pains to say yesterday’s speech was not an emergency Budget, a mini-Budget, or any kind of Budget at all.

There will only be one major so-called fiscal event every year, and this was not it.

So, that’s why there were no mentions or changes to the duty on alcohol or fuel.

But, remember, whatever happened yesterday, there are some significant rises in essential bills heading our way on 1 April.

Kevin Peachey
Cost of living correspondent

Julie has been in touch with the BBC to question whether benefits for the elderly and disabled are being cut so that defence spending can be raised.

The government would say this is absolutely not true.

There is, indeed, an increase in defence spending. Military expenditure is rising to 2.36% of national income next year, with plans for it to continue to rise to 2.5% by 2027.

However, this is paid for by reducing overseas aid from 0.5% to 0.3% of gross national income in 2027, and from the Treasury's reserves.

There are spending cuts affecting, for example, some people with disabilities – but they are separate.

Kevin Peachey
Cost of living correspondent

Adam, from Alton, says that if he does lose money he receives for his disability, he will need to apply for help elsewhere. He asks whether that could end up costing the government more money.

Adam is correct to say that there is a delicate balancing act here.

The official forecaster, the Office for Budget Responsibility, says details of the welfare reforms came to it too late for a complete analysis of the spending plans.

Even then, it disagreed with the Treasury’s view about how much would be saved through the initial proposals.

People’s natural, understandable, and financial reaction to these plans are difficult to calculate. So expect more wrangling over whether the savings will amount to what the government wants.

Overall, its plan is to get more people into work, which they say will be better for individuals and also save the government money.

Kevin Peachey
Cost of living correspondent

Chris in Bristol has been in touch via Your Voice, Your BBC News. He asks why the government won’t raise income tax rates, and also raise the income threshold at which it starts to be paid.

While plenty of people are making the economic case for raising income tax, this is essentially a political choice.

In its manifesto, Labour promised not to increase the rates on the three main personal taxes – VAT, income tax and national insurance.

Of course, manifesto promises have been broken before, but doing so after less than a year in power would be quite a reversal.

That said, economists have warned that, with so little room for manoeuvre, the chancellor may be forced into raising taxes at the Budget in the autumn.

Remember, the income thresholds at which income tax is paid have been frozen, and will continue to be so until 2028 – which in itself is effectively a tax raising measure.

Faisal Islam
Economics editor

UK government borrowing costs rose again on Thursday morning to the highest level since January, with the rate on 10-year bonds hitting 4.8%.

By the afternoon that had settled but, like European rates, borrowing costs in the UK have risen over the past month.

It has been fuelled by plans for massive extra borrowing to fund defence and infrastructure, with notable increases in rates for the likes of Germany.

Rising rates in the UK, if maintained, will keep the question of further adjustments to taxes and spending in the Autumn Budget an open one. They could also feed into higher borrowing costs for mortgages and business lending.

The government’s forecaster has already said Rachel Reeves's room for manoeuvre to stay within her self-imposed borrowing limits could be wiped out entirely if there is a full-scale global trade war.

Relatively small changes to borrowing rates or to the UK's long-term productivity could also lead to the chancellor to make more spending cuts or tax rises.

Image source, PA Media

Earlier, we heard the chancellor say her deputy Darren Jones had been "clumsy" when he likened benefit changes to removing a child's pocket money. He made the comments while appearing on the BBC's Politics Live yesterday.

Rachel Reeves told LBC both she and Jones have young children but said it was "not the right analogy" to describe the cuts.

Asked about his comments during an appearance on ITV's Peston last night, Jones apologised and said: "It was tactless and it wasn't well considered."

Image source, Reuters

Keir Starmer has backed Rachel Reeves over her insistence that cuts to welfare will not drive up poverty levels.

The prime minister's official spokesperson said "of course the prime minister shares the sentiment the Chancellor expressed this morning".

That's a reference to Reeves telling media outlets this morning that the changes will encourage people back into work, which she says makes a household "much less likely" to be in relative poverty.

An assessment of the plans published by officials at the Department for Work and Pensions yesterday estimated 250,000 people would be pushed into relative poverty by 2030, including 50,000 children, as a result.

However, the government has repeatedly argued the assessment does not give the full picture as it does not take into account the positive impact of people moving off welfare and into work.

Image source, PA Media

Earlier, we reported that the Office for Budget Responsibility's (OBR) forecast suggests there's a 50-50 chance Rachel Reeves will achieve a drop in debt as a percentage of the economy by 2030.

But the Institute for Fiscal Studies says this forecast depends on reversing a 5p cut in fuel duty.

Here's some context:

• Fuel duty was frozen for more than a decade under the Conservatives
• In 2022, then-Chancellor Rishi Sunak cut it by 5p per litre to help motorists with rising fuel prices
• Rachel Reeves' October Budget last year extended the temporary cut for another year
• Fuel duty applies to petrol, diesel and other fuels, with rates varying (VAT is extra)

As our business reporter Dearbail Jordan wrote, it means that if Labour doesn't reverse the fuel duty cut, she risks missing one of her "non-negotiable" targets.

We can bring you more comments now about welfare cuts from callers to 5 Live earlier this morning.

Rosie in Southend has received Pip since 2022, but says she hesitated to apply for it despite being incredibly unwell, because she felt ashamed.

She tells host Nicky Campbell that stigma is created "by politicians like Rachel Reeves, who continue to scapegoat disabled people and the most vulnerable."

Rosie adds: "There are so many hidden costs when you are disabled".

Image source, PA Media

Speaking to reporters a little earlier today about the Spring Statement, leader of the Conservative Party Kemi Badenoch said: "This is a government that has not through what it's doing and is reacting to circumstances. We need a plan."

Badenoch adds: "The changes the chancellor made yesterday [are] because of mistakes she made in October."

On the possibility of tariffs from the USA, Badenoch said the government has "no capacity to weather these sorts of difficulties" and urges the government to "hurry up" with a UK-US trade deal to "protect" the UK from the tariffs.

There's been a lot of talk about fiscal headroom over the past couple days.

But what does that actually mean?

Fiscal headroom is the amount a government can increase spending or cut taxes without breaking its own fiscal rules.

Reeves has set strict rules for herself, including:

• Day-to-day government costs must be covered by tax income, not borrowing
• Debt must be falling as a share of national income by 2029/30

Last October, the OBR said Reeves had just £9.9bn in headroom after her first Budget.

Since then, rising borrowing costs, tariffs and defence spending have put pressure on government spending, risking wiping out the headroom.

Yesterday's Spring Statementwas aimed at restoring it, and the OBR says it has – back to £9.9bn.

But if the economy shifts again, that could disappear.

That's why Paul Johnson, from the think tank IFS, has said Reeves may have to raise taxes again in the Autumn Budget.

Benefits have been grabbing the headlines, but one grant that hasn’t had much of the limelight is Access To Work.

Changes are afoot – what are they and what could it mean? The Business Disability Forum have given BBC's Access All podcast the lowdown.

A day after the chancellor's Spring Statement, official figures show that the number of children living in poverty in the UK has reached a record high of 4.45 million in the year to March 2024, once a family's housing costs are taken into account.

The Department for Work and Pensions (DWP), which began publishing the data in 2002/3, says the number has risen from 4.33 million in the previous year.

A household is considered to be in relative poverty if the money it has coming in is below 60% of the median average wage, minus the cost of housing.

The DWP's assessment of welfare changes published yesterday estimated the cuts could push a further 250,000 people, including 50,000 children, into poverty by 2029/30 - but ministers say that estimate does not take into account those who will move off benefits and into work.

Dearbail Jordan
Business reporter

We journalists are a cynical bunch.

At the IFS press conference on the Spring Statement, director Paul Johnson is asked: "Is all hope lost?"

"Things aren't quite that bad," he laughs. "Hope is always there."

He says that things might yet turn around. After this year, the OBR is still projecting growth and incomes will be a little bit better by 2030.

Hope is not lost, he concludes: "Not all of it anyway."

Iain Watson
Political correspondent

There has been some unease in Labour's ranks over the planned savings in the welfare budget.

The government's newly published assessment of the impact, external of the changes has increased that anxiety.

The Department of Work and Pensions says the plans will lead to increased poverty levels. It shows that talk of difficult decisions is not mere ministerial sloganeering.

Polls suggest tackling the benefits bill is popular, but voters and Labour MPs tend to be more squeamish when cuts affect disabled people.

The scale of those cuts has led some Labour MPs publicly to declare that they won't vote for the welfare changes – though any rebellion is ultimately likely to be unsuccessful.

• Read more about the anxiety among Labour MPs

MP Steve Darling asked an urgent question in Parliament a little earlier. He requested that the Work and Pensions Secretary make a statement on the impact of changes to Pip on people receiving carers allowance.

Stephen Timms, who is Minister of State in the Department for Work and Pensions, says they plan to "fix a broken system", and will provide a "strong and sustainable safety net" for everybody who needs it.

They will change Pip payments to support "those in the greatest need", he says.

The cost has increased by £2bn, which he says is unsustainable, and they are working how to best support those who will be no longer eligible.

He pays tribute to unpaid carers, and says he recognises their "value and vital contribution".

Pip will always be there for those with the "greatest needs", he adds.

Dearbail Jordan
Business reporter

There is only a 50-50 chance that Rachel Reeves will meet her own rule for debt to be falling as a percentage of the economy by 2030, according to the OBR - and even that's in question according to the IFS.

The think tank points out that the calculations the OBR used for this forecast are based on the assumption that a 5p cut on fuel duty is reversed between now and then.

As we pointed out yesterday, governments are loathe to raise fuel duty. But if Labour doesn't, it could mean that Reeves is in greater danger of missing one of her "non-negotiable" targets.

Image source, PA Media