Chancellor Rachel Reeves set out her plans for the UK economy during her Spring Statement in the House of Commons on Wednesday.
Yesterday, the Office for Budget Responsibility (OBR) downgraded predicted growth for this year from 2% to 1% in a blow to the chancellor's plans, forcing her to make more extensive changes.
She blamed global instability, arguing that the world was "changing before our eyes" and promising a "new era of security and national renewal."
Reeves used her statement to announce a further £2.2billion for defence, while a target has been set to reduce the administrative costs of government departments by 15% by 2030.
Real household disposable income per person is expected to grow by an average of around 0.5% a year, the OBR said.
Ms Reeves said this meant that by 2029 households would be on average more than £500 a year better off compared with what the OBR had expected in October.
In a further blow to her Budget, the overnight news of Trump's 25% tariffs on car imports has threatened to derail her economic plans.
An escalation of tariffs would be bad for the UK and the US, Reeves says. However, she says that the UK is in talks with the US to carve out a new deal.
"Our economies are so closely intertwined", she says.
Responding to the Chancellor’s Spring Statement, Shevaun Haviland, Director General of the British Chambers of Commerce said: “The Chancellor saw a small dip in inflation, however her statement was made against a backdrop of downgraded economic growth for 2025. It all paints a challenging spring landscape as businesses struggle to bloom.
“The government must focus on reducing the cost pressures for businesses, boosting investment and exports.
“Firms are realistic, but they are also hurting. Within days they will be faced with higher national insurance (NI) contributions and a rise in the national living wage. Our research shows 82% of businesses will be impacted by the NI hike – with firms forced to raise prices, postpone investment and cut back on recruitment.
“That’s why we need a wider tax roadmap for business. The financial impact of the Employment Rights Bill has yet to be assessed by the OBR, but they expect it to be negative. The threat of US tariffs also looms large.
“The government is right to prioritise increased defence spending. It is an opportunity for the UK’s world-leading defence industry and their supply chains to grow, while protecting wider global interests. We particularly welcome plans to make it easier for SMEs to bid for defence contracts.
“Investment in construction training to get the country building is encouraging. Removing planning barriers is fundamental to getting economic growth, but businesses need confidence to build.
“It is right that the Chancellor is thinking about government efficiency and productivity. That’s what businesses have to do daily.
“For the economy to grow, businesses need to thrive. Ahead of the Comprehensive Spending Review we’ll be working closely with ministers to ensure that they create the right environment for firms.”