Overview

• Rachel Reeves is set to unveil significant spending cuts in the spring statement to adhere to Labour's self-imposed fiscal rules, avoiding tax increases.
• The Office for Budget Responsibility is expected to report that worsening economic growth risks exceeding government borrowing limits.
• Labour MPs and cabinet ministers are divided, with some urging a shift in fiscal rules or tax policy to avoid austerity-like measures.
• The government has already announced £5bn in welfare cuts, but these savings were anticipated in previous budget forecasts and will not close the fiscal gap.
• Increased defence spending commitments, including a target of 3% of GDP, are further straining public finances and complicating budget decisions.