Rachel Reeves says Labour was elected to “bring change to our country, provide security for working people and deliver a decade of national renewal”.

She points to the fact that the Bank of England has cut interest rates three times since the government was elected.

But the chancellor’s room for fiscal manoeuvre has narrowed since October, when she delivered Labour’s first budget in 14 years. Tax receipts have stalled amid weaker-than-expected growth, while Donald Trump’s erratic start to his second term as US president have pushed up borrowing costs.

She says the “global economy has become more uncertain” and that Labour needs to be “active” in order to secure the future and deliver prosperity.

Peter Walker, senior political correspondent: ​​Ministers arriving for this morning’s pre-statement cabinet meetingwere largely grim-faced for the cameras, but Reeves begins her speech in a more upbeat way, saying Labour had restored stability to the economy. She then goes on to warn about “uncertain” times ahead due to global events – largely meaning (though this is, as ever, unspoken) by the chaos of the second Trump administration.

OBR and fiscal rules

• On the eve of the statement, it emerged that the Office for Budget Responsibility had told Reeves that her planned benefit cuts would only raise £3.4bn by 2029-30, not the £5bn she had predicted.

• Reeves says she will stick to her cast-iron “fiscal rules” and blames the Liz Truss mini-budget for pushing up borrowing rates and harming “ordinary working people” two years on.

• The budget would have been in deficit by £4.1bn without the measures she is taking today, Reeves says. She says she has restored the government’s headroom, to a surplus of £6bn in 2027-28, rising to £9.9bn in 2029-30, compared with the previous government’s £6.5bn.

• Net financial debt will be 83.5% in 2026-27, Reeves says, falling thereafter.

PW: As is mandatory for Labour financial statements, Reeves spends time lambasting the impact of Truss’s mini-budget, and then using it as a reason to justify the tough decisions she will announce. “The British people put their trust in this Labour government because they knew that we – I – would never take risks with the public finances,” she says. This is perhaps the central political message of this statement – things are hard, but we have no choice (and it’s not our fault). Will this be enough for wavering Labour MPs? We shall see in the days and weeks ahead.

Taxes

• The statement does not contain any further tax increases. But “it cannot be right that others are still evading what they rightly owe in tax”. Cutting-edge tech will help HMRC crack down on tax avoidance, which will raise a further £1bn, taking the total to £7.5bn.

PW: Tax rises were never on the horizon for this statement, however much the Conservatives tried to label it an “emergency budget”. Will that still the case by the real budget in autumn? That is a very different matter.