Ahead of Chancellor Rachel Reeves' first Spring Statement taking place tomorrow, Wednesday 26th March, after Prime Minister’s Questions. Below you can find an update of what is expected to come out of it, provided by our public affairs agency partner FTI.

The formal part of this Statement will be the Chancellor’s response to the revised forecasts for the economy and public finances released earlier that day. These forecasts are published by the Office for Budget Responsibility (OBR) twice a year and set out whether, on the back of the OBR’s judgement and information provided by HM Treasury, the Chancellor is on course to meet her targets for the public finances.

It is widely expected that the OBR will sharply cut its growth outlook and warn that the £9.9 billion fiscal headroom set out in the October Budget has disappeared. This reflects lower growth figures as well as new economic commitments, most notably in relation to increased spending on defence. It means that on Wednesday Reeves will need to announce how she plans to meet her fiscal rules – that is, not to borrow to fund day-to-day spending and to ensure debt is falling as a share of national income by 2029.

Options are limited because this is not a fiscal event, with tax changes being reserved for the Autumn Budget. Similarly, large spending decisions are also expected to be deferred until the completion of the Spending Review in June.

We anticipate that Reeves – framing the straitened economic circumstances within a global context and beginning her speech by noting that “the world has changed” – will take a multi-pronged approach to regaining some of this headroom.

The welfare reforms last week were a significant announcement, and Reeves is also expected to confirm proposals to cut significant numbers of civil service jobs, crack down on tax avoidance, and ringfence much of the defence budget for investment in new technologies.

This weekend, it was also reported that the Chancellor will “reprofile” expenditure to allow her to “front-load” spending in the next two years, before reducing capital expenditure to a year-on-year increase of just 1% towards the end of this parliament. More broadly, Government departments have already been asked to identify the 20% of spending that is lowest priority, and we may see more details on Wednesday about the overall size of spending cuts assumed across the forecast period.

Alongside this will come a number of smaller-scale growth measures, including policies to fix potholes and train more construction workers; and we also expect that the Government will use this opportunity to launch consultations on wider tax-related policies (such as, for instance, ISA entitlements) ahead of new policies being announced at the Autumn Budget.

With any further big-ticket items less likely, the Spring Statement is set to be something of a stopgap, a bid to calm the waters before the more consequential events later in the year. Yet it remains an important moment politically.

An important aspect will be party management. It is no secret that there are some in the Cabinet as well as on the back benches who are uncomfortable with the substance and the tone of recent announcements on welfare and international aid. Wednesday’s publication of the impact assessment of the proposed welfare reforms is likely to be difficult reading. Reeves will have to persuade her party of the need for these changes, while rolling the pitch for future cuts in June.

At a stage where even some from the loyalist new cohort of MPs are growing uneasy with the scale of planned cuts, particularly in light of reports that universal free meals for infants might now be in the firing line, this is no easy task. The irony is that the thrust of the Government’s economic argument – that stability, investment and reform (on the supply side) are the key to economic growth, while reforms to cut waste within the state will make the Government more agile and fit for the future – is likely to win more plaudits from the political centre right.