Written Statement: Welsh Government response to the UK Autumn Budget 2025

Today, the Chancellor of the Exchequer, Rachel Reeves, presented the UK Autumn Budget, including the Office for Budget Responsibility’s (OBR) new forecast for the UK economy and public finances. 

This is against the backdrop of a turbulent world economy, including increases in US tariffs, higher global interest rates and heightened geo-political tensions, which together have contributed to undermine growth and have made the outlook for public finances extremely challenging. The OBR has concluded the damage inflicted on the UK economy’s productive capacity is more severe than previously estimated. 

While the UK Government has had to make difficult decisions in its Autumn Budget, the Chancellor presented a progressive package of measures, focused on supporting those who need it most, putting money back in people’s pockets and protecting public spending commitments. 

This is a Budget which will benefit people across Wales – from increases to the minimum wage and national living wage; increases in the state pension, support with energy bills and a new work guarantee for young people.

We have consistently urged the UK Government to take concrete action to tackle child poverty. Today’s announcement to scrap the two-child limit is a much-welcomed step which will lift thousands of families out of poverty.Around 70,000 children in Wales will benefit from the abolition of the two-child limit. This will help reverse child poverty rates, making a real difference to the lives of children. 

The Welsh Government will receive an additional £508m extra in resource and capital funding over the Spending Review period in consequential funding. 

This is in addition to the £5bn additional funding the Welsh Government received at the UK Spending Review in June.

The UK Budget also confirmed significant new investments in Wales, including remediation of brownfield land at Port Talbot and investment in the semi-conductor cluster in South Wales. This is in addition to the recent announcement about investment in nuclear energy at Wylfa on Anglesey, new AI Growth Zones for North and South Wales, and £547m is returned to the Welsh Government to deliver a new Local Growth Fund programme. 

These new investments will boost jobs and growth and help transform our local economies, to support people and businesses across Wales. Next week, the First Minister will hold the Wales Investment Summit, highlighting opportunities in sectors such as advanced manufacturing, life sciences, and green energy and showcasing Wales as a leading destination for investment.

Senedd Members will be aware that at the Finance Interministerial Standing Committee last month, it was agreed that work would be undertaken to identify opportunities to improve the way the Barnett system operates to address concerns regarding its fairness.

Today’s UK Budget delivers increased fiscal flexibilities for Wales. There will be a 10% uplift in our capital borrowing and reserve limits in 2026-27, with further increases in line with inflation from 2027-28. The Chancellor has also agreed to unlimited access to the Wales Reserve in 2026-27. We will continue to work with the UK Government to secure further improvements in our fiscal flexibilities, including permanent access to the Wales Reserve.

This Budget demonstrates what can be achieved when two governments work together to deliver investment with generational impacts for Wales, providing targeted action to support households with the cost of living and supporting Welsh public services and economic growth. 

We will carefully consider the implications of the UK Budget for the Welsh Budget, which will be published on 20 January 2026.