Spring Statement 2025 - Key takeaways & implications
On March 26, 2025, Chancellor Rachel Reeves delivered the UK’s Spring Statement, outlining significant fiscal measures aimed at stabilising the economy and addressing public spending.
Economic Outlook
Growth Forecasts: The Office for Budget Responsibility (OBR) revised the UK’s 2025 growth forecast down to 1%, citing ongoing economic challenges. However, growth is projected to improve in subsequent years, with forecasts of 1.9% in 2026 and stabilising around 1.8% through 2029.
Inflation: Inflation is expected to average 3.2% in 2025, with a target to return to 2% by 2027.
Welfare Reforms
Benefit Adjustments: Significant changes include tightening eligibility for Personal Independence Payment (PIP) and halving the Universal Credit health top-up for new claimants starting April 2026. Additionally, the Work Capability Assessment will be phased out by 2028, replaced by PIP assessments.
New Unemployment Insurance: Plans are underway to merge the New Style Jobseeker’s Allowance and Employment Support Allowance into a new “Unemployment Insurance” benefit, set at £138 per week and time-limited, based on National Insurance contributions.
Taxation & Public Spending
Tax Measures: The government aims to increase tax revenues by cracking down on tax evasion, projected to raise an additional £1 billion annually. Late payment penalties for Making Tax Digital will also increase from April 2025.
Public Sector Cuts: Approximately 10,000 civil service jobs are set to be cut, contributing to a £2 billion reduction in government costs.
Defence & International Aid
Defence Spending: An additional £2.2 billion has been allocated to defence, aiming to increase military expenditure to 2.36% of national income next year.
Overseas Aid: To fund the defence budget, overseas aid will be reduced from 0.5% to 0.3% of gross national income by 2027.
Housing & Infrastructure
Housing Initiatives: Reforms to England’s planning system are expected to boost housebuilding by 170,000 over five years, contributing an additional 0.2% to the economy.
Implications for you…
These developments may affect your financial planning, tax liabilities and investment strategies. It’s crucial to reassess your financial goals and ensure your plans align with the changing economic landscape.
At Reybridge Capital, we’re committed to helping you navigate these changes and secure your financial future. Contact us today to discuss how these updates may impact your personal and/or business finances.