Key Points from the Spring Statement 2025

The Chancellor of the Exchequer, Rachel Reeves, delivered her Spring Statement in the House of Commons this afternoon. If you found the announcement too much to digest, we’ve gathered together all of the key information for you.

Economic stability and fiscal rules

The Bank of England has reduced interest rates three times since Labour's election.

Tax receipts have stalled due to weaker growth, leading to reduced expected savings from benefits cuts.

The Office for Budget Responsibility (OBR) forecasts have been adjusted accordingly.

Reeves remains committed to fiscal rules, with a target to reduce national debt.

Possible outcome: Businesses may experience a more favourable borrowing environment due to lower interest rates. However, stagnant tax receipts and weaker growth could signal a cautious economic outlook, potentially affecting business investment decisions.

Taxes

No new tax rises were announced.

Increased measures to crack down on tax evasion are expected to raise an additional £1 billion.

Possible outcome: Whilst the absence of new tax increases provides some stability for businesses and individuals, the intensified focus on tax evasion may require companies to ensure strict compliance with tax regulations to avoid penalties.

Welfare cuts

Controversial welfare cuts include reducing the Universal Credit health element for new claimants and freezing it.

These measures have faced criticism from charities and some Labour MPs.

Possible outcome: Individuals relying on these benefits may experience financial strain, potentially affecting consumer spending patterns. Businesses should be aware of possible shifts in consumer behaviour due to these changes.

Spending

Defence spending will rise to 2.5% of GDP, funded by cuts to international aid and NHS England's restructuring to improve efficiency.

A £3.25 billion investment in a new transformation fund has been announced.

Overall government spending is set to increase above inflation.

Possible outcome: Businesses in the defence sector may find new opportunities due to increased spending. However, cuts in other areas, such as international aid, could impact organisations that rely on government contracts in those sectors.

Inflation and growth

Inflation is forecasted to meet the Bank of England's 2% target by 2027.

The OBR's growth forecast for 2025 has been revised down to 1% (from the originally stated 2%).

The GDP growth forecast for subsequent years is 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.

Possible outcome: The downward revision in growth forecasts suggests a slower economic environment, which may influence business expansion plans and investment strategies.

Education

Reeves pointed out that earlier this week, the Education Secretary announced more than £600 million of investment to train 60,000 more construction workers.

This includes 10 new technical excellence colleges across every region of the country.

Reeves said that Labour's planning reforms "will lead to housebuilding reaching a forty-year high".

Possible outcome: This investment could help to address labour shortages, improve industry skills, and accelerate housebuilding and infrastructure projects across the UK.

Cost of living

The OBR has confirmed that real household disposable income will grow "at almost twice the rate" anticipated in last year's Autumn Statement.

Potential outcome: If the Chancellor's statement is accurate, households will be on average £500 a year better off.