With the government under pressure over its finances, the chancellor is expected to update her growth forecast, and provide more detail on policies already announced.

Welfare spending

The government is looking to save £5bn a year on the welfare bill by 2030, and set out plans to that effect on 18 March. But last night it emerged Reeves is expected to widen those cuts after the Office for Budget Responsibility (OBR) estimated they would not save as much as intended.

The watchdog's assessment is that the changes will save £3.4bn in 2029/30 - meaning Reeves will save more than £1bn less than she thought.

The Department for Work and Pensions (DWP) will publish details today about who will be affected.

Civil service

The chancellor has pledged to reduce government running costs by 15% by the end of the decade.

About 10,000 civil service jobs are expected to go, including staff who work in HR, policy advice, communications and office management.

Aid and defence

The chancellor will argue the UK has to "move quickly in a changing world" and will confirm a £2.2bn increase in defence spending.

The government announced earlier this month that it would cut the foreign aid budget to increase military spending to 2.5% of national income by 2027.

Tom Espiner
Business reporter

The government has self-imposed fiscal rules, which most governments in wealthy nations have in place to try to reassure investors and maintain credibility with financial markets – essentially to keep borrowing costs down.

Reeves's two main rules are: not to borrow to fund day-to-day public spending; and to get debt falling as a share of the UK economic output by 2029/30.

But some analysts have said that Reeves has "boxed herself in" by saying she will meet these fiscal targets but not raise taxes or return to austerity by making deep cuts to public services.

But breaching fiscal rules can be costly. In September 2022 Liz Truss and Kwasi Kwarteng's mini-Budget led to a surge in borrowing rates, which swelled mortgage rates.

"How bad is the news?"

That's what Helen Miller, deputy director of the Institute of Fiscal Studies think tank, says she will be looking for when she watches the Spring Statement.

Speaking to BBC Radio 4's Today programme, Miller says Reeves, in her autumn Budget, set herself a "tiny margin" to operate within her fiscal rules - not to borrow to fund day-to-day public spending by 2030. We'll bring you more details on those fiscal rules in our next post.

Having put so much emphasis on her rules being "non negotiable", it would be “very difficult” for Reeves to break them “at the first time of being tested”, Miller adds.

“In some sense, again, she sort of set herself up for a problem because she made a set of promises and she can’t keep all of them," Miller says, adding "she promised she wouldn’t change her fiscal rules, she promised no more tax rises, and she promised no more spending cuts - and she can’t deliver all of those things.”

Tom Espiner
Business reporter

The rate of UK inflation – that is, the pace of price rises - can affect your personal finances in an number of ways.

Firstly, you’ll notice how fast bills are going up – people tend to notice food and energy prices the most.

If prices rise faster than your wages, then you’ll have less money to spend.

On average, though, wages have been rising faster than inflation for a couple of years.

Secondly, the Bank of England is tasked with keeping inflation at 2%. If it is above that, the Bank may hold or raise interest rates – although it is expected that rates will go down in 2025.

The Bank rate affects the cost of loans such as mortgages – if it goes down, mortgage rates tend to follow.

Image source, Reuters

Although today's figures show inflation fell in the 12 months to February, it remains above the government's 2% target, and the Conservatives are saying government choices have "saddled the country with higher inflation for longer".

“We left Labour with inflation bang on target," shadow chancellor Mel Stride says, adding unless Reeves "takes urgent action at her emergency budget today, working families will continue to pay the price".

Meanwhile, the Liberal Democrats say the inflation figure "will be of no comfort to the millions of families across the country who are struggling" as prices continue to rise.

“It is time for the government to fix the mess they made in the autumn Budget and deliver a real plan for growth to finally get our economy growing," Lib Dem Treasury spokeswoman Daisy Cooper says.

Pace of price increases remains above targetpublished at 07:49 Greenwich Mean Time 26 March

07:49 GMT 26 March

Marc Ashdown
Business correspondent

An inflation reading of 0.1% below forecasts is hardly cause for celebration, but there will no doubt be sighs of relief at the Treasury this morning.

The chancellor will be keen to set the tone for the coming year with today’s spring statement. And inflation easing off will be a help to Rachel Reeves.

However, the pace of price rises remains well above the Bank of England’s target of 2%. And analysts warn that this dip could be the “calm before the storm”.

Next month prices for the new tax year will come into effect, with bills for energy, water and council tax all set to rise.

With measures from October’s Budget also expected to push costs up for many businesses, the rate of inflation is expected to now increase again for most of the year.

Economists expect it to peak at around 4% in September but ease back to around 2% by this time next year.

The pressure on costs for the government, business, and hard pushed households shows no sign of letting up just yet.

Reeves expected to say growth forecasts downgradedpublished at 07:40 Greenwich Mean Time 26 March

07:40 GMT 26 March

Dharshini David
Deputy economics editor

Chancellor Rachel Reeves is expected to reveal later that her independent forecasters have downgraded their growth expectations for this year from 2% to maybe 1% as other economists have done.

The chancellor will say the world has changed, amid geopolitical uncertainty.

But the Conservatives have labelled her a "growth killer", as surveys suggest many businesses are looking to reduce headcount and/or raise prices on the back of policies such as the rise in National Insurance contributions.

Reeves may point to the measures such as housebuilding, designed to boost growth. But these take years to deliver.

In the meantime, households could be short-changed. The October Budget forecast suggested that on average we'd each be £500 better off after inflation by 2030, making it the second worst Parliament on record for living standards.

Now, the predicted gains could be smaller. Growth really is far more than just a line on the chart.

Let's pause for a moment to look at what is meant by economic growth, which will be a focal point of today's updates on the economy.

It normally refers to how much the production of goods or services has increased over a given period of time.

One way to measure growth is Gross Domestic Product (GDP), which is the value of those goods and services.

If GDP is steadily rising, people pay more in tax because they're earning and spending more.

The government can then choose to spend that money on public services, such as schools, the police, and hospitals.

But when the economy stagnates, or shrinks, the government can choose to rein in spending.

Image source, Reuters

We've just had the government's response to the inflation rate falling to 2.8% - saying it is focused on delivering economic growth and stability.

In a statement, Treasury minister Darren Jones says: “Our number one mission is kickstarting growth to raise living standards for working people, that is why we are protecting working people’s payslips from higher taxes.

"In a changing world, we’re focused on delivering economic stability to secure people’s finances – freezing fuel duty, protecting the triple lock and increasing the national living wage by £1,400 a year for full-time workers, while going further and faster to drive growth through our plan for change."

Some relief for the chancellor - but it might be short-livedpublished at 07:10 Greenwich Mean Time 26 March

07:10 GMT 26 March

Dharshini David
Deputy economics editor

Growth is not only the government's number one mission but may be one of its biggest headaches.

But the chancellor got a little relief from the latest inflation figures which showed a slowdown in price rises in February. But that might be short-lived.

First, as the dip in inflation was caused by discounting of items like clothing - a volatile component.

And second as a recent survey, also from the ONS, revealed, almost a half of businesses are considering price rises as they brace for next month's tax rises and increase in National Living Wage.

Today's OBR forecasts are expected to point to a further increase in inflation - but only a slight and short-lived one.

Tom Espiner
Business reporter

Inflation was lower in February, mainly due to a fall in the price of women's clothes, says ONS chief economist Grant Fitzner.

This was only partially offset by small increases in alcoholic drinks, for example, he said.

Tom Espiner
Business reporter

The inflation rate has come in lower than expected at 2.8% for February, down from the 3% recorded for January.

Analysts had expected that figure to be 2.9%.

It remains above the Bank of England's target of 2%.

The Bank expects inflation to temporarily rise to 3.7% this year, mainly due to higher energy prices.

The UK inflation rate falls to 2.8% in the year to February, the latest figures from the Office for National Statistics show.

Tom Espiner
Business reporter

We'll shortly get the latest inflation figures for February, but what does that actually mean?

Inflation is the pace of price rises over a certain time period, given as a percentage.

So if annual inflation on a bottle of milk is running at 5%, then milk that cost £1 a year ago will now cost £1.05.

People tend to notice inflation in food and energy prices the most.

In the year to January, food price inflation was 3.3% - and that is after a big spike that started at the end of 2021 and peaked at more than 19% in March and April 2023 before coming back down.

You may have noticed that going to the supermarket is still a bit of a shock. Although inflation comes down, prices themselves tend not to fall, at least not significantly.

Quite aside from that, the Bank of England has a 2% target for inflation, and uses interest rates to try to control it.

People tend to notice the effects of this on the cost of loans such as mortgages.

• Before the new figures land, get up to speed with the UK inflation rate and how quickly prices are rising

The UK's economic performance has been pretty lacklustre for the past few years, with low growth and rising prices.

Last month, the Bank of England halved its growth forecast, and the government's independent forecaster the Office for Budget Responsibility is also likely to downgrade its growth prediction today.

Some economists expect that there will be cuts to government spending so Rachel Reeves can meet self-imposed tax and spending rules - more on that shortly.

The predictions for this year are quite gloomy too. With the Bank expecting inflation to rise to 3.7% between July and September 2025 due to higher energy prices, water bills and bus fares, and sluggish growth, it sets the scene for "stagflation" – rising prices and low growth eating into living standards.

What does today mean for me? What is the chancellor announcing? What is a Spring statement exactly?

As part of Your Voice, Your BBC News, our business and politics teams are on hand to answer your questions today. To get in touch:

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Mismatch between government and OBR on welfare cuts savingspublished at 06:16 Greenwich Mean Time 26 March

06:16 GMT 26 March

Henry Zeffman
Chief political correspondent

It was already a curious element to today that we knew the shape of the chancellor’s biggest announcement, namely the benefit cuts (also known as welfare reform, usually depending on which side of the argument a given politician is coming from).

Not so fast. The fact that Rachel Reeves will have to announce further cuts today because of the mismatch between the government and the Office for Budget Responsibility (OBR) about how much her policies will save risks inflaming the row within the Labour Party about her approach.

Today we will also get crucial new information in the form of the government’s own impact assessment. This will set out in much more detail what kind of claimants will be affected by the reforms.

One question running through Labour’s debate on this has been whether the government is doing this because it wants to – a moral mission to get people back into work – or because it has to – an accounting ploy to make the numbers add up.

As ever, the answer is probably somewhere between the two, but the latest negotiations between the government and the OBR will strengthen the claims of those in Labour who argue the latter.

Michael Race, Faisal Islam & Joshua Nevett
Business reporter, Economics editor & Political reporter

Chancellor Rachel Reeves is set to make further cuts to welfare benefits and government departments in her Spring Statement today.

The government announced big welfare spending reductions last week but the chancellor is set to expand the cuts after being told reforms to the system would save less than planned.

It emerged last night that Reeves would widen her cuts to welfare after the Office for Budget Responsibility (OBR), which monitors the government's spending plans, estimated the welfare system reforms would not save the £5bn as planned.

The reforms include stricter tests for personal independence (Pip) payments, affecting hundreds of thousands of claimants.

But it is understood the OBR assessed that many claimants facing losing health-related benefit payments would instead claim for more severe conditions.

The government did not deny reports, first carried by The Times, external that the chancellor would make further cuts to try to make up some of the shortfall.

• Read the full story here

Emily Atkinson
Live page editor

Image source, EPA-EFE/REX/Shutterstock

Here’s a look at what’s to come (all timings below are in GMT):

Early doors - at 07:00 - the Office for National Statistics (ONS) will publish the latest inflation figures, which will tell us how prices are rising across the UK.

Come 08:30, the prime minister will hold his weekly cabinet meeting, moved this week from Tuesday to Wednesday to account for the Spring Statement.

At around 11:20, Rachel Reeves, the chancellor, will depart No 11 Downing Street and head for the House of Commons.

She’ll take her place on the government benches at 12:00, at which point Prime Minister’s Questions gets going.

After that finishes - at approximately 12:30 - Reeves will deliver her Spring Statement.

The OBR will also publish its latest economic and fiscal outlook. Its chair, Richard Hughes, will follow this up with a news conference at 14:30. And at some point today - timing TBC - the Department for Work and Pensions (DWP) will publish an impact assessment into the government’s welfare reforms.

We’ve got a packed day ahead of us. Settle in.

Emily Atkinson
Live page editor

At 12:30 GMT, Chancellor Rachel Reeves delivers her Spring Statement on the state of the UK economy - and the government’s spending plans.

It's not a Budget, so don’t expect major tax rises or cuts.

But we will get an idea of how much government has to spend, including what Reeves calls "tactical cuts to public spending" to shore up the UK finances in "unprecedented times".

We're also expecting to hear the Office for Budget Responsibility cut its forecasts for UK growth - further restricting the choices of a chancellor who says growth is her "number one mission".

On top of that, we have Prime Minister’s Questions at 12:00 - Keir Starmer versus Kemi Badenoch - and the latest UK inflation figures at 07:00.