UK Inflation Drops to 2.8% Ahead of Spring Statement

Chancellor Rachel Reeves is set to announce a £2.2 billion increase in UK defence spending in her upcoming spring statement, emphasizing the importance of national and economic security. This comes amidst a backdrop of further cuts to welfare benefits, as the Office for Budget Responsibility indicated that expected savings from planned reforms were overstated, creating a £1.6 billion gap. Additionally, UK inflation has unexpectedly cooled to 2.8% in February, providing some relief ahead of Reeves' address, but the economic outlook remains clouded by low growth and rising prices. The Chancellor is also expected to deliver gloomy forecasts about the economy, with concerns over household pressures and confidence in the business sector. Analysts suggest that the Bank of England may be prompted to cut interest rates again in the near future due to these inflation trends. Overall, the spring statement will reflect the government's struggle between increasing defence spending and managing economic challenges.