Chancellor of the Exchequer Rachel Reeves has today issued her first Spring Statement for 2025.

The Statement does not contain any tax increases, but the growth forecast is halved in a brief and pessimistic precursor to the Autumn Budget.

However, Reeves did manage to restore the government’s fiscal headroom to £9.9bn and the Office for Budget Responsibility offered a glimmer of hope by upgrading the growth forecast from next year onwards. 

Key points to know:

  • No tax increases, but the government will help HMRC crack down on tax avoidance.
  • £3.5bn of day-to-day savings on the cost of running the government by 2029-30.
  • £3.25bn of investment brought forward for a new “transformation fund” to bring down the cost of running government by making public services more efficient.
  • The OBR has revised down growth forecasts for 2025 from 2% to 1%.
  • The OBR has concluded that they will permanently increase the level of real GDP by 0.2% in 2029/30, meaning an additional £6.8bn for the economy.
  • Capital spending to increase by an average of £2bn a year to drive economic growth.
  • Housebuilding will reach a 40-year high, hitting 305,000 homes a year by the end of the forecast period, with 1.3m homes over the next five years, close to the manifesto promise of 1.5m within this parliament.
  • Inflation fell in February to 2.8%.
  • An extra £2.2bn for the Ministry of Defence will be provided in the next financial year to address increasing global uncertainty.
  • The government will spend a minimum of 10% of the MoD’s equipment budget on tech such as drones and AI, boosting production in places such as Derby, Glasgow, and Newport.
  • Reeves aims to make the UK a “defence-industrial superpower”, placing defence at the heart of economic growth.

Summary

The Spring Statement has not given us much to go on in terms of tax, so speculation will abound ahead of the Autumn Statement.

Reeves initially pledged to hold just one fiscal event per year, aiming to provide stability for businesses and individuals. However, with economic conditions shifting rapidly and the fiscal headroom already depleted, she has acknowledged that circumstances have changed.

Will the government stick to its manifesto commitment against tax rises, or will the need for revenue force a rethink? Watch this space…