Rachel Reeves Spring statement March 2025
So, the latest Spring Statement is in, and – shockingly – things aren’t quite as rosy as the government would like us to believe.
Growth forecasts have been slashed, the tax burden is hitting record highs, and businesses and households are bracing for yet another wave of costs. Meanwhile, we’re being told that cuts to welfare, civil service redundancies, and a “leaner” government will somehow fix everything.
Of course, there are promises of investment - Heathrow, housebuilding, and defence tech - but we’ve heard all this before.
Whether any of it materialises in a way that actually benefits businesses remains to be seen. Here’s a quick breakdown of what was announced.
Economic Growth Forecast
The Office for Budget Responsibility (OBR) has halved its 2025 economic growth forecast to 1%. However, growth is expected to improve in future years. The government plans to support growth through infrastructure projects, planning reforms, and investment in pensions and the National Wealth Fund.
Tax Burden
While no further tax increases were announced, the OBR expects the UK’s tax burden to reach a record 37.7% of GDP by 2027-28. Tax changes, including National Insurance increases, income tax threshold freezes, and stamp duty rises, will take effect next week.
Budget Deficit Avoided
The government was previously expected to face a £4.1bn budget deficit by 2029-30, but new measures aim to achieve a £9.9bn surplus.
Welfare Cuts
Changes to welfare spending will reduce costs by £4.8bn per year. Adjustments include cuts to disability and sickness benefits, with Universal Credit standard allowances increasing while the health element is reduced for new claimants.
Government Spending Cuts
A 15% reduction in Whitehall spending aims to save £6.1bn by 2029-30. A £3.25bn fund will support AI, justice system upgrades, foster care, and civil service redundancies, potentially affecting 50,000 jobs.
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Defence Investment
A £2.2bn “down payment” will go towards defence, with at least 10% allocated to advanced technology, including drones and AI.
Planning Reforms
New planning reforms will accelerate housebuilding, with expected economic benefits of £6.8bn per year by 2030 and £15.1bn by 2035.
