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rachel Reeves has just delivered the
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spring statement in the House of Commons
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which saw her confirm further cuts to
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welfare and government running costs in
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a bid to ensure her fiscal rules are
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still met The chancellor spoke to MPs
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this lunchtime as it was revealed
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watchdog the Office for Budget
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Responsibility had downgraded the UK's
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growth forecasts from 2 to 1% for this
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year and that her financial headroom of
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9.9 billion would have turned into a 4.1
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billion pound deficit which she blamed
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on higher government borrowing costs had
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she not acted But Reeves said her
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headroom was now restored in full and in
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accordance with her own fiscal rules
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after she was forced to find billions in
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additional savings She opted to further
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reduce welfare spending in a final
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adjustment following an initial round of
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cuts announced by work and pension
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secretary Liz Kendall last week which
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will see the health related universal
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credit allowance cut by 50% and then
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frozen Kendall claimed last week the
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package would save55 billion but the OBR
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said the measure is now3.4 4 billion
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with Reeves additional cuts confirmed
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today and taking into account some
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billion pound of additional support
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aimed at getting Brits back into work
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Reeves argued the OBR has upgraded its
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longerterm forecasts which they said
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were boosted by Labour's planning
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reforms which are now expected to
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permanently increase UK GDP by around
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6.8 billion She said that is the biggest
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positive growth impact that the OBR have
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ever reflected in their forecast for a
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policy with no fiscal cost However
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despite the chancellor also announcing
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increased defense funding and more
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investment in long-term infrastructure
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projects the measures on welfare could
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be risky and are already proving
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unpopular among Labour MPs on the left
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of the party Responding to the welfare
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cuts shadow chancellor Mel Stride said
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the chancellor's decisions were the
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worst of all worlds with savings
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inadequate and costs still spiraling
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with her changes likely to harm many
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vulnerable people he added Libdam MP
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Steve Darling called the welfare changes
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illconceived and said severe cuts to the
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benefit system will hit some of the most
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vulnerable in our society While Labour
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MP Richard Burgon accused Reeves of
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making a cruel choice and urged her to
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take the braver option and tax the
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wealthiest through a wealth tax But
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director of the Institute for Fiscal
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Studies economist Paul Johnson said the
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fiscal event was just about the smallest
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Reeves could have managed and warned she
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still had only a tiny amount of headroom
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And the OBR itself warned the impact of
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potential trade tariffs imposed by US
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President Donald Trump could see the
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UK's GDP hit and wipe out Reeves fiscal
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surplus again But director of the
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Institute for Fiscal Studies economist
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Paul Johnson said the fiscal event was
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just about the smallest Reeves could
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have managed and warned she still had
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only a tiny amount of headroom And the
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OBR itself warned that the impact of
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potential trade tariffs imposed by US
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President Donald Trump could see the
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UK's GDP hit and wipe out Reeves fiscal
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surplus again What do you make of the
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Chancellor's Spring statement let us
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know your thoughts in the comments and
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