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Welfare cut U-turn shows UK "formidable" challenges, rating firm S&P warns

BY Reuters | CORPORATE | 07/04/25 04:42 AM EDT

LONDON, July 4 (Reuters) - The inability of Britain's government to make modest cuts to welfare spending this week underscores the underscores 'formidable' challenge it faces in repairing it finances, credit rating agency S&P Global said on Friday.

UK Prime Minister Keir Starmer was forced to scrap 5 billion pounds ($6.83 billion) worth of benefits spending due to opposition from within his own government, shredding the margin that it relies on to meet its self-imposed fiscal rules.

"We consider the inability to make modest cuts to welfare spending, which has ballooned in the UK since the 2020 pandemic, underscores the UK government's very limited budgetary room for manoeuvre," S&P said in an analysis. ($1 = 0.7321 pounds) (Reporting by Marc Jones; Editing by Amanda Cooper)

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