Cost of living correspondent
Getty ImagesTalk of growth forecasts and self-imposed financial rules may feel very distant from you and your life, but the Spring Statement could affect both your job and your money.
Here’s what it could mean for you.
1. Benefit changes
If you are on benefits, you could be directly affected.
The sweeping changes to the benefits system, first announced a week ago, will see some people lose support from late 2026, although universal credit payments are set to rise.
It means:
- By 2029-30, some 3.2 million families – some current recipients and some future recipients – will see cuts, with an average loss of £1,720 per year once inflation is taken into account
- Within that total, around 800,000 claimants of Personal Independence Payments (Pip) will be hit. This will include 370,000 losing their entitlement, and others receiving less than they had anticipated. The average loss is £4,500 a year
- Another 3.8 million families will be £420 a year better off on average owing to the rise in universal credit, after taking into account the impact of inflation
Additional changes to the welfare reforms also mean less in benefits than some may have thought.
For example, the government had said there would be a rise in the standard allowance for universal credit for 6.5 million people. That rise will now be £1 a week lower than previously billed.
The health element of universal credit (which reflects a limited capability to work) was going to be halved for new claimants to £50 a week in 2026-27, then frozen.
Now ministers have said that, in addition, existing claimants will see their entitlement frozen at £97 a week until 2029-30.
2. Living standards and household bills
No major government statements come in isolation. Only a week after this one, a series of household bills will rise.
We already knew that increases in water bills, energy prices, council tax and more will kick in on 1 April.
There will also be an increase in the minimum wage, which had previously been announced.
The wider backdrop is that many people have been pushed to their financial limits by the rising cost of living.
Inflation – which charts the rising cost of living – is expected to be higher this year than forecast in October.
It will average 3.2% this year, according to the Office for Budget Responsibility, before falling to 2.1% in 2026 and then 2% from 2027. The government’s target is 2%.
As a result, interest rates are expected to be slightly higher than previously thought. Interest rates are used by the Bank of England to control inflation.
Overall, however, living standards are expected to improve.
This is measured by real household disposable income which is expected to rise by 0.5% a year on average between now and 2030.
Remember, these are only forecasts. They may be wrong and are subject to change.
3. Jobs and services cut or created
Analysis and forecasts about the general state of the economy will influence the decisions the chancellor chooses to make.
For example, official forecasts about economic growth this year have been halved from 2% to 1%, but are higher in subsequent years owing, in part, to the government’s housebuilding programme.
A spending review in June will outline how much each government department has to spend, but the Treasury now has a better idea of how much it has to work with.
Jobs could be affected and, for example, any cuts to local government funding could have a direct impact on services. Theoretically, that could lead, for example, to councils considering what to charge for local services.
On the flipside, investment by the government – such as with defence projects – could create new jobs.
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