Following the Labour government’s Autumn Budget delivered in late 2024, the first financial statement has been made and delivered for 2025.
On Wednesday (26th March), the Chancellor of the Exchequer, Rachel Reeves, delivered the Spring Statement which announced revised forecasts for the economy and public finances. This speech saw the confirmation of prior changes outlined in the Autumn Budget, as well as updates on the UK’s economy.
Below, we share the key points everyone must watch out for to stay ready for the proposed changes.
Chancellor Reeves has announced welfare reform, departmental spending cuts and increased investment relative to day-to-day spending. The Chancellor began the Spring Statement by doubling down on the claims made in the Autumn Budget of last year. One claim in particular is that this Statement contains no further tax increases.
This announcement comes as a commitment to Labour’s desire to stick to one single major financial announcement per year. This Statement can therefore be thought of as more of an economic update, with a focus on long-term growth and stability, rather than major interim changes to prior budgets.
In the Autumn Budget, £100bn of additional capital spending was announced. The goal of this is to “fix our crumbling infrastructure and create jobs in every corner of the country”. This Statement confirmed an additional increase in capital spending at an average of £2bn per year.
On the 18th of March, just a week before the Spring Statement was delivered, the Department for Work and Pensions (DWP) announced welfare reforms that will reduce spending to the tune of £5bn in 2029/30.
These cuts were reiterated in the statement, with the government announcing the introduction of £1bn in employment support measures to help disabled people and those on long-term sick.
A further £400m was also announced to be attributed to the DWP to help “deliver these reforms effectively and fairly”.
Armed with forecasts provided by the OBR, the Chancellor gave an update on the UK’s inflation figures.
The Statement claims that inflation is expected to fall to 2.1% next year, down from an average of 3.2% in 2025. This would mean that the Bank of England’s target of 2% would be met in two years.
While inflation is on track, the Chancellor also spoke to the Organisation for Economic Co-operation and Development (OECD) and Office for Budget Responsibility (OBR) growth forecasts, which both saw their numbers decrease based on the country’s economic outlook. The OBR’s forecasts, for example, have decreased from 2% to 1%.
With the end of the 2024/2025 tax year coming, as of the 5th of April, there are other changes to be aware of as both an employee and business, including:
You can find out more about these changes in our article: Preparing for the end of the tax year: Things all businesses should know
For previous articles on the Autumn Budget for homeowners and landlords click here:
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