The UK government’s cancellation of £5 billion welfare reduction plans revealed the severe financial constraints facing the nation according to S&P Global. Prime Minister Keir Starmer abandoned the proposal because his administration members opposed it which reduced his ability to fulfill fiscal requirements.
The UK received a stable AA rating outlook from S&P but the agency described the country’s fiscal situation as vulnerable. The agency stated that the UK government faces extreme budget constraints because it cannot implement minimal welfare spending reductions which have expanded since the pandemic.
The abandoned welfare measures which focused on disability benefits would have reached 0.2% of GDP by 2029. The small size of this figure compared to last year’s 5.9% GDP deficit which reached almost £170 billion stands as a significant indicator according to S&P.
