Chancellor delivers security and national renewal for Northern Ireland in new era of global change
Source: gov.uk (2025-03-26)

The UK Chancellor delivered the Spring Statement today (Wednesday 26 March 2025)

Chancellor vows to bring about “new era of security and national renewal” as she delivered a Spring Statement to kickstart economic growth, protect working people and keep Britain safe.

People across the UK to be on average £500 a year better off by the end of this parliament compared to under the previous government, putting more money in people’s pockets.

Growth at the heart of Plan for Change as £13 billion of additional capital spend allocated alongside £2.2 billion defence funding boost next year will get Britain building.

People across the UK will be on average £500 better off from 2029, relative to OBR’s autumn forecast, helping to deliver the Plan for Change as the Chancellor today (Wednesday 26 March) announced a Spring Statement to grasp the opportunities in a changing world.

The OBR also confirmed that the UK economy is expected to grow faster than expected from 2026 and will be larger by 2029 compared to its autumn forecast – up to 9.5% compared to 9.2%.

The Chancellor also set out how the government is protecting national security and maximising the growth potential of the UK defence sector by confirming a £2.2 billion increase in the UK-wide defence budget in 2025-26.

The Spring Statement delivers UK Government spending plans focused on its core objectives, bringing security and stability for working people across the UK.

It follows the Budget in the autumn where the Chancellor announced that the Northern Ireland Executive will be provided with an £18.2 billion settlement in 2025/26 – the largest in real terms in the history of devolution. This includes an additional £1.5 billion through the Barnett formula, with £1.2 billion for day-to-day spending and £270 million for capital investment.

The measures taken today top these Barnett consequentials up by a further £14 million in 2025/26. The Northern Ireland Executive are receiving over 24% more per person than equivalent UK Government spending in the rest of the UK, including the 2024 restoration financial package.

The Northern Ireland Executive’s block grant funding from 2026-27 onwards will be confirmed at Phase 2 of the Spending Review, which concludes on 11 June 2025. The Chief Secretary to the Treasury will meet with his counterparts from the devolved governments to discuss their priorities ahead of its conclusion.

Secretary of State for Northern Ireland Hilary Benn said:

I welcome the fact that Northern Ireland will receive a £14 million boost in Barnett consequentials as a result of today’s announcements, building on the record £18.2 billion settlement which was confirmed by the UK Government last Autumn.

This also follows a £235 million package to transform public services in Northern Ireland, which will support the transformation of key public services which make a real impact on people’s lives, including health, education, planning and justice.

Importantly, today’s announcement reinforces the economic growth potential of the UK defence sector, and follows the Prime Minister’s announcement of a £1.6bn deal to provide air defence missiles for Ukraine, which will create 200 jobs in Northern Ireland and demonstrates the strength of the local defence industry.

From next week, working people across Northern Ireland and the UK will also benefit from an increase to the National Living Wage, putting more money into the pockets of hard-working people.

And the UK Government continues to provide support across Northern Ireland through City and Growth deal packages, having confirmed the Mid-South West and Causeway Coast and Glens City deal last year.

Taken together, these measures will foster growth in Northern Ireland, creating jobs, supporting public services, and boosting the quality of life for local people.”

Growth

Kickstarting economic growth is the number one mission of this government, putting more money in people’s pockets.

The UK Government has already made considerable progress on growth in Northern Ireland, including confirming the Mid-South West and Causeway Coast and Glens City deal. Earlier this month, the Prime Minister also announced a £1.6bn deal to provide air defence missiles for Ukraine, which will create 200 jobs in Northern Ireland. In February we launched Intertrade UK which will advise on how businesses can take advantage of the full opportunities of the UK internal market.

The actions of this government across the Autumn Budget and Spring Statement, if sustained, lead to a 0.6% rise in the level of real GDP by 2034-25.

The OBR concluded that the stability rule is met by £9.9 billion and the investment rule is met by £15.1 billion. Both rules are met two years early, meaning from 2027-28 the government is only borrowing for investment and net financial debt is falling.

The government is not satisfied with short-term growth figures, and is going further and faster today to improve this.

The Chancellor has announced a further £13 billion of capital investment over the Parliament to go further on growth, on top of the £100 billion uplift announced at Autumn Budget. This will deliver the projects needed to catalyse private investment, boost growth and drive forward the UK’s modern industrial strategy.

Taken together, this greater capital investment more than offsets the modest savings on day-to-day spending and means the total departmental spending will increase over the next five years, when compared with plans in the Autumn.

Defence

The world is changing before our eyes, reshaped by global instability, including Russian aggression in Ukraine. Europe is facing a once-in-a-generation moment for its collective security, with conflicts overseas undermining security and prosperity at home.

A month ago, the Prime Minister announced the biggest sustained increase in defence spending since the Cold War as a result of the changing global picture, now reaching 2.5% of GDP by April 2027, and with an ambition to reach 3% in the next Parliament subject to economic and fiscal conditions.

We are going further and faster to protect our national security and maximise the economic growth potential of the UK defence sector.

Increasing the defence budget by £2.2 billion in 2025-26, taking additional spending on defence to over £5 billion since the Autumn Budget.

This raises spending on defence to 2.36% next year and will be invested in fitting Royal Navy ships with Directed Energy Weapons five years earlier than planned, providing better homes for military families and modernising His Majesty’s Naval Base Portsmouth.

Setting a minimum 10 percent ringfence for equipment spending on emerging technologies like drones and autonomous systems, dual-use technology, and AI-powered capabilities, so that British troops have the tools they need to fight and win in modern warfare.

Getting this new tech into the hands of our armed forces quicker by cutting away bureaucracy, with a new UK Defence Innovation unit within the Ministry of Defence spearheading efforts to identify promising technology and ensure these get to the frontline at speed, while also bolstering the UK tech sector and crowding in private investment.

Creating bespoke procurement processes for different types of military equipment, learning lessons from our rapid support for Ukraine to drive faster timescale targets for operationalising new tanks, aircraft and other essential tools for modern warfare.

This government is determined to transform the defence sector into an engine for growth by focusing this investment on where it boosts the productive capacity of the economy such as investment in innovation and novel technologies. As a result of the increase in defence spending to 2.5%, the government estimates this could lead to around 0.3% higher GDP in the long run, equivalent to around £11 billion of GDP in today’s money.

The government’s investment in defence will also support its number one mission to deliver economic growth. UK citizens will be protected from threats at home whilst creating a stable environment in which businesses can thrive, and supporting highly skilled jobs and apprenticeships across the whole of the UK.

Reform

The UK Government is determined to make the public sector more productive and to improve services for working people. But the changing world means we need to go further and faster to ensure we can deliver the public services that working people care most about.

The government has shown its commitment to taking the difficult decisions required to drive efficiencies and reform the state – reducing bureaucratic inefficiencies and duplication; and driving out wasteful government spend through cancelling thousands of government credit cards.

Getting more people into jobs is also central to the government’s growth mission. The broken welfare system is letting people down by asking them to prove what they can’t do, rather than focusing on what they could do with the right support - trapping people due to fear of trying work, lack of support and poor financial incentives.

The Chancellor has confirmed the creation of a £3.25 billion Transformation Fund to support the fundamental reform of public services, seize the opportunities of digital technology and Artificial Intelligence (AI), and transform frontline delivery to release savings for taxpayers over the long-term.

The UK Government provided £235 million to transform public services in Northern Ireland as part of the £3.3 billion restoration package for the Executive. This month we agreed to allocate £129 million of that funding to projects across several priority public services including health, education, planning and justice. The funding will see £61 million go towards expanding the multi-disciplinary teams in GP clinics across Northern Ireland, and support five other projects across justice, special education and infrastructure which represent key priorities in the Executive’s Programme for Government.

Looking Forward

This Spring Statement builds on the Autumn Budget and the decisions taken since required to deliver stability to the British economy and kickstart economic growth.

The government will set out its plans for spending and key public sector reforms at the Spending Review which will conclude on 11 June 2025.

Notes to editors

Government calculations for the long-run impacts of higher defence spending are based on estimates from Antolin-Diaz and Surico (2025), forthcoming in the American Economic Review (AER), of the GDP impact of higher defence spending on GDP. Their estimates of the GDP multiplier stabilise after ten years at around 1.6, which is assumed to reflect an appropriate long-run multiplier for potential output, as any demand-side effects are likely to have dissipated at the ten-year horizon.

Defence spending as a share of GDP is set to rise from 2.3% to 2.5%, an increase of 0.2 percentage points. Applying an elasticity of 1.6 to this change implies a long-run increase in the level of potential output of approximately 0.3%. A long-run increase to the level of potential output of 0.3% is equivalent to around £11 billion of GDP in the long run, in today’s prices.