{"id":661,"date":"2025-04-03T14:33:19","date_gmt":"2025-04-03T13:33:19","guid":{"rendered":"https:\/\/www.wealth-generation.com\/insights\/?p=661"},"modified":"2025-04-03T14:33:19","modified_gmt":"2025-04-03T13:33:19","slug":"spring-statement","status":"publish","type":"post","link":"https:\/\/www.wealth-generation.com\/insights\/spring-statement\/","title":{"rendered":"Spring Statement"},"content":{"rendered":"<p>This Spring Statement was always intended to be a fiscal non-event.<\/p>\n<p>Chancellor Rachel Reeves had promised that there would only be one major economic event each year and last October\u2019s controversial budget was most definitely intended to be it.<\/p>\n<p>Speculation had been rising that this Spring Statement might break that promise, and bring some surprises and policy changes, amidst the economic headwinds the government currently faces. Most notably:<\/p>\n<ul>\n<li>No real signs of the growth that she and her government colleagues have bet their reputations on. This is before the increase to employer National Insurance announced in October has washed through the economy.<\/li>\n<li>A report from the OBR that estimated that the controversial cuts to welfare spending would save \u00a31bn less than the government had forecast. This has created pressure for further cuts in spending.<\/li>\n<li>The need to fund further defence spending by \u00a32.2bn, in part due to pressure from the US. In February, the Prime Minister announced the government would increase spending on defence to 2.5% of GDP by 2027, with an &#8220;ambition&#8221; to reach 3% after the next general election.<\/li>\n<\/ul>\n<p>Low growth and higher borrowing costs left the Chancellor even more constrained by her own fiscal rules than in October. Without a significant change to economic growth, it is hard not to wonder \u2018when\u2019 rather than \u2018if\u2019 Reeves will start to course correct, all of which fuels more speculation about what this will look like, and greater uncertainty which hinders investment and growth.<\/p>\n<p>One piece of good news was a drop in inflation to 2.8% in February after it had crept up to 3% in January.<\/p>\n<p>So what actually happened in the Spring Statement? There were no new tax changes and only a few peripheral new policies announced.<\/p>\n<ul>\n<li>The OBR has halved the 2025 growth estimate from 2% to 1%<\/li>\n<li>However, the OBR has also upgraded the UK\u2019s economic growth forecast from 2026 onwards. GDP growth is forecast at 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.<\/li>\n<li>US trade tariffs are a key geopolitical risk to UK growth with the potential to wipe out any surplus projected in the 2025 budget<\/li>\n<li>The OBR believe debt as a percentage of gross domestic product (GDP) will fall in five years\u2019 time, meeting one of the Chancellor\u2019s key rules<\/li>\n<li>The Chancellor believes the 2% inflation target will be met by 2027. The OBR\u00a0now thinks inflation in 2025 will average 3.2% before &#8220;falling rapidly&#8221; to 2.1% in 2026, and reaching the Bank of England&#8217;s 2% target from 2027 onwards.<\/li>\n<li>An additional \u00a32.2bn defence spending will be funded by overseas aid cuts, as expected. There was a focus on making the UK a major international player for defence.<\/li>\n<li>Whilst borrowing and debt are more expensive than previously expected, the OBR have stated that they believe the Chancellor\u2019s policy changes, including welfare reforms and cuts to day-to-day departmental spending, will \u201crestore it to the \u00a310bn surplus the chancellor had in October\u201d.<\/li>\n<\/ul>\n<p>There was nothing of note to mention for personal finances. There is already a major review of pensions underway which could see state pension age rise, more pension money diverted towards UK business, and consolidation of pension funds. We are likely to see more reform in the Autumn should the situation worsen. However, there were no \u2018rabbits in the hat\u2019 this spring.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This Spring Statement was always intended to be a fiscal non-event. Chancellor Rachel Reeves had promised that there would only be one major economic event each year and last October\u2019s controversial budget was most definitely intended to be it. Speculation had been rising that this Spring Statement might break that promise, and bring some surprises and policy changes, amidst the economic headwinds the government currently faces. Most notably: No&hellip;<\/p>\n<p> <a class=\"more-link\" href=\"https:\/\/www.wealth-generation.com\/insights\/spring-statement\/\">Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":68,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":{"0":"post-661","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-current-topics"},"_links":{"self":[{"href":"https:\/\/www.wealth-generation.com\/insights\/wp-json\/wp\/v2\/posts\/661","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.wealth-generation.com\/insights\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.wealth-generation.com\/insights\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.wealth-generation.com\/insights\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.wealth-generation.com\/insights\/wp-json\/wp\/v2\/comments?post=661"}],"version-history":[{"count":1,"href":"https:\/\/www.wealth-generation.com\/insights\/wp-json\/wp\/v2\/posts\/661\/revisions"}],"predecessor-version":[{"id":662,"href":"https:\/\/www.wealth-generation.com\/insights\/wp-json\/wp\/v2\/posts\/661\/revisions\/662"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.wealth-generation.com\/insights\/wp-json\/wp\/v2\/media\/68"}],"wp:attachment":[{"href":"https:\/\/www.wealth-generation.com\/insights\/wp-json\/wp\/v2\/media?parent=661"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.wealth-generation.com\/insights\/wp-json\/wp\/v2\/categories?post=661"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.wealth-generation.com\/insights\/wp-json\/wp\/v2\/tags?post=661"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}