After much speculation, Chancellor Rachel Reeves’ delivered her Spring Statement to Parliament. It followed some rather welcome news earlier in the day that the rate of UK inflation had fallen for the year to the end of February to 2.8%.
However, Reeves hasn’t exactly been awash with good news. With global economic uncertainty, UK growth remaining sluggish, higher than expected borrowing and the fiscal headroom she thought she might have last Autumn, now being cut, cuts to government departments – particularly the welfare budget with Reeves confirming cuts here today – were firmly on the agenda. But as she reminded us today, ‘the world is changing’.
Advisers will also have had their eyes fixed on the independent forecasters, the OBR’s report also being released today. The OBR had previously been forecasting growth expectations for the UK of 2% -now forecasts are downgraded at halved for the current year to 1%. There will also be much interest in the details about government public spending plans and how that might impact the all important bond markets as well as benefits payments and other government departments. After the Liz Truss debacle a few years back, they won’t want to unsettle the gilt market that’s for sure.
The Industry Reacts
Experts from right across the financial services spectrum have been sharing their reaction to what Chancellor Reeves had to say in her Spring Statement, and what it might mean for the economy, for markets, for clients and for the business of advice as follows:
A statement from the PFS after the speech said: “The Spring Statement underlines how global events have put new demands on already stretched welfare budgets. Many people will have questions about what this spending pressure will mean for them – not just around disability, but more widely around long-term care and other areas where they may have been counting on support from the state. The FCA has reported in its new strategy that over 7 million people in the UK are already struggling to pay bills/debts and that many would struggle to deal with a financial shock. Now, more than ever before, individuals will need a strong, long term financial plan to see them through difficult times.
“The PFS agrees with the regulator that innovative, competitive financial services are essential to improving the finances of many. To be successful, those providing these products and services must ensure that they are tailoring them to the needs of each individual, so that every customer can get the best outcomes. Careful planning of this sort requires the support of professional advisers, who are able to identify and respond to particular vulnerabilities. The PFS is looking forward to working with the FCA, Government and other stakeholders to deliver against these ambitions, which will undoubtedly have positive benefits for the country’s growth ambitions as much as individual customers.”
George Brown, Economist, Schroders: “Investors will be left in no doubt of the Chancellor’s commitment to fiscal sustainability given the corrective action taken today. But this needs to go hand in hand with improving the supply side of the economy. Even tepid growth is causing inflation to remain stubbornly sticky, such that we expect the Bank of England will have limited room to cut rates much further. Recent government decisions to greenlight several major infrastructure projects are critical steps in the right direction for boosting long term growth. However, businesses and households can also play a key supporting role with the right incentives in place to funnel funds into cultivating the British success stories of tomorrow.”
Chris Sanger, Tax Policy Leader at EY, said: “After weeks of speculation, the Chancellor kept her promise of one fiscal event a year, leaving tax policy announcements to the Autumn Budget. Attention will now turn to June’s Spending Review, followed by November’s Budget, to see whether the Chancellor increases the headroom available within the fiscal rules following the OBR’s latest forecast.
“On tax, it was always unlikely that we’d see any further changes come out of today, particularly given that measures announced last October, such as the rise in employer National Insurance contributions, are yet to come into effect. However, what we may hear in the coming weeks are announcements on tax administration and simplification efforts. While not policy changes, these positive steps include consultations on e-invoicing and cost sharing and have the potential to both reduce the tax gap and attract greater investment in the UK.
“The Corporate Tax Roadmap, published alongside the last Autumn Budget, set out to improve the certainty and predictability of our tax regime. The Roadmap provided the foundation for reform, and the Government may now look to develop this document further, delivering on its aims to simplify the UK tax system and create confidence among businesses and investors, for the benefit of the economy.”
Alice Harmer, personal wealth adviser at Schroders Personal Wealth, has commented:
“Today’s Spring Statement from the Chancellor primarily outlined cuts in funding, which will naturally impact those requiring assistance from the government and the UK’s overall growth prospects.
“It is essential to remember that we have yet to see the legislation following the key announcements from the October Budget, such as changes to Inheritance Tax (IHT) and business relief. This is needed to give people greater clarity so that they can plan to pass on their wealth accordingly.
“What our clients are telling us is that they are worried, and some are starting to prepare by speaking to their advisers and revaluating their financial plans.”
Nick Henshaw, Head of Intermediaries at Wesleyan Assurance Society, said: “It was reported that the Chancellor had been mulling cutting the cash ISA allowance in today’s Spring Statement. This could now happen in the Autumn Budget instead.
“The government is trying to build a culture of retail investing – something we welcome if it supports people’s long-term financial wellbeing. And it presents a real opportunity for intermediaries to once again underline the value of advice.
“If and when cash ISA reform comes, savers may start exploring alternative solutions for their money that still provide the same tax benefits.
“Advisers can support this switch, which could include helping savers consider a Stocks and Shares ISA with specialist smoothed funds within them. These funds are available on certain platforms, and can help ‘smooth’ out sharp peaks and troughs in the investing journey – something likely to appeal to new investors who might be nervous about day-to-day volatility.”
Sheldon MacDonald, CIO of Marlborough, suggested that the Chancellor should have paid more attention to the current state of the UK economy rather than making bold predictions about its future commenting:
“The bottom line is that markets aren’t going to price a promise of what might happen in 2029 versus an obvious reality of what’s happening in 2025.
“What’s truly relevant is what the Chancellor is doing today, what’s happening right now, what the markets need to consider over the next hours, days, weeks and months.
“Nobody expected any kind of magic bullet here, and we certainly didn’t get one. On the whole, not a great deal has changed – but what has changed is in the wrong direction.
“What we hoped for is that the Chancellor would fix the roof before building an extension. Instead it looks like she’s decided to build an extension while the roof still has a gaping hole.”
Carol Knight, Chief Executive of The Investing and Saving Alliance (TISA), said: “We’re relieved that the Chancellor has decided not to announce any immediate changes to the incredibly popular Cash ISA in her push for growth. Using a stick, by cutting the tax benefits of cash ISAs is not the way to boost the investment culture in the UK. There is a huge amount that the Chancellor could and should do to provide a boost to the consumer investment culture in the UK.
“Better routes for consumers to access meaningful advice, guidance and education are essential to unlocking personal investment. We welcome the Chancellor’s announcement that they will be working with the FCA to deliver a system of Targeted Support, which will help millions more make effective financial decisions and feel confident in investing their cash. By also working with the sector and FCA to make changes to risk warnings to ensure they are balanced and contextualised and amend regulations to allow firms to provide Performance Disclosures which are accessible and understandable, we can improve the financial wellbeing of millions.
“We look forward to working with the Chancellor over the coming months to bring these changes about”
Faye Church, Chartered Senior Financial Planner, Rathbones said: “It’s reassuring for our clients and all investors that the Chancellor has stuck to her word and not announced any tax increases or personal finance changes in this Spring Statement. Unfounded speculation can cause people to make knee-jerk decisions that have significant financial implications – nearly one in seven (14%) retail investors* said they regret the financial decisions that they took based on rumours and speculation in the run up to the 2024 Autumn Budget.”
Andy Butcher, Branch Principal & Chartered Financial Planner at Raymond James Investment Services said: “There are currently too few Brits investing, and even more may be put off it if they must complete a tax return for only modest gains. Investing is a great way to boost returns in the long term and prepare for retirement, while reducing the burden on the state in older age. With this in mind, the Chancellor not making any changes to capital gains tax, dividend and ISA allowances is a positive move. Reducing allowances would potentially discourage people from saving and investing, a harmful outcome to Brits who have already suffered under a high inflationary environment over the past few years.”
“Despite inheritance tax (IHT) being paid by relatively few estates, the changes brought forth in the Chancellor’s Autumn Budget sparked significant backlash. Updates to business relief and agricultural relief have caused mixed reactions, with some business owners unsure whether to reinvest profits when they know an IHT liability is down the road, suggesting potential negative repercussions for UK businesses and the competitiveness of the UK market in the longer term. Any further changes to gifts and the seven-year rule would have also added complexity to the current situation, further incentivising business owners to sell up, defeating the purpose of a pro-growth policy. As such, the Chancellor’s decision to refrain from making further tax changes in today’s Spring Statement is a positive outcome.”
Rachel Winter, Partner at Killik & Co, comments on the Spring Statement: “Markets reacted negatively when Rachel Reeves stated that the OBR had reduced its growth forecast for 2025 to 1%. Although the FTSE 100 and the FTSE 250 remain in positive territory today, they both lost ground from the start of the Spring Statement speech. The pound has remained reasonably stable, but it may be impacted by future inflation movements. If inflation does indeed average 3.2% for 2025 as predicted, it will be difficult for the Bank of England to continue cutting interest rates. This could strengthen the pound, although it would likely put the brakes on economic growth.
“UK-listed defence companies are showing gains this afternoon. After decades of underinvestment in defence, the UK has now followed in the footsteps of its European peers and announced a substantial increase in spending. Shares in BAE Systems have risen 28% since the start of February.
“The OBR’s prediction about the increase in national income that will result from Labour’s planning reforms was a pleasant surprise. That said, shares in some UK-listed housebuilders are in negative territory today, suggesting there is a degree of scepticism regarding these plans.”
Matthew Amis, Investment Director, at Aberdeen, comments; “Aided by this morning’s better inflation data, the gilt market should be relatively happy this afternoon.
OBR forecasts show GDP growth in the medium term slightly higher and inflation slightly lower. But more importantly the amount of gilts issued this year is well below market consensus. To add to the gilt positive tone the reduction in long maturity gilts has far exceeded market expectation. This should give the much-beleaguered gilt market the opportunity to perform in the short term. “
Lucy Coutts, Investment Director at JM Finn said about the Spring Statement: “With more anxiety in the markets about the government’s borrowing than the fiscal rules headlines, no big moves in the gilt market would be seen as success. At the time of writing, the longer dated gilts are little changed.
The OBR was an outlier in its optimism in November with little evidence to support its 2% target, and it has now reduced its growth forecast for the UK in 2025 to 1%.
The UK’s credit rating from S&P is AA stable. When S&P reviews the rating in April, it will be looking for a measured way in which the UK finances are managed. I think the statement demonstrates the UK government has a plan – the gilt ship is steady.”
Jamie Jenkins, director of policy at Royal London comments: “Today’s Spring Statement was largely just that, and not a Budget, which is now reserved for the Autumn. Hopefully, the nation’s finances spring forward, but don’t fall back.
“As widely expected, the Chancellor has committed to having one fiscal event each year, sticking to the Government’s self-imposed fiscal rules, and not raising the three main rates of tax on working people. There were no new tax rises announced, rather, a focus on reducing the welfare bill as already widely trailed.
“If there were anything that could be viewed as a ‘rabbit from the hat’ it was that the OBR has attributed a significant uplift to growth forecasts against the planning reforms announced.
“There were no concrete announcements on pensions or ISAs, but a brief mention of the former in the speech, and a reference to a forthcoming consultation in the accompanying papers on the latter. In both cases, the focus will be on generating greater investment in the UK economy, and specifically growth sectors. We can expect more detail on this in the coming weeks.”
Melanie Spencer, sales and growth lead at Target Group, said: “Much to the dismay of the mortgage market and the wider housing sector, there was nothing really earth shattering to come out of today’s statement. It was interesting to see the OBR predict that the Government will come close to its housebuilding targets by the end of the parliament, although we still lack any further updates on how potential borrowers will be supported in buying these properties. In just one measure, it would have been great to see changes to the Lifetime ISA to make it fit for purpose in today’s climate and property market.
“The same is also true for measures to help speed up the homebuying process, with no further progress announced – leaving lenders, platform providers and technology firms to do much of the heavy lifting.
“As announced prior, the Chancellor focused on reforms to the welfare system, all while aiming to cut some of the fat to make the government leaner and more efficient. She confirmed the use of AI tools to help modernise the state. Given that we have already seen examples of bias within government AI systems – ones detecting welfare fraud no less – the government will have to tread the same careful line as financial services when implementing AI systems and make use of key partners and integrations to deliver innovation and efficiency while minimising risk.”
George Lagarias, Chief Economist at Forvis Mazars said: “Markets don’t hate big budgets nearly as much as they hate big surprises. The bond market is largely unchanged before and after the budget, suggesting that the Chancellor has managed to play all the right notes by carefully setting expectations and then sticking fairly close to them. The UK needed to spend big on Defence and Healthcare, without completely gutting other services. Chancellor Reeves intoned as many times that she would stick to her fiscal rules, as the markets needed to hear.
“Given the deteriorating global economic outlook, the OBR had little choice other than to bring growth expectations down, closer to market consensus of nearly 1%. This is a realistic assessment of things, and sends a very clear signal to the markets that the UK government is playing by the rules.”
Commenting on the impact the changes to nondomicile status will have in the UK, Conor Tobin, ACA, Director at Vialto Partners said: “Today’s Spring Statement marks the final nail in the coffin for non-domicile status in the UK, as Labour moves to pursue a residence-based tax system. While the intention behind this is to create a more equitable tax environment, and short-term revenues may be raised, the chancellor risks accelerating the current exodus of high-net-worth individuals leaving the UK.
“The government estimates that the changes to the current regime will raise approximately £2.7bn a year by 2028-29, but the reality could be more complex. By potentially discouraging a demographic that already contributes significant revenue each year, directly and indirectly, it’s unclear whether the Treasury will end up with higher or lower net tax receipts in the long run. The reforms could make the UK more attractive to the internationally mobile and key groups of employers in the short term, but this watershed moment may leave the UK less appealing for others, such as entrepreneurs, in the long run.”
Also commenting on HNW individuals, Caroline Miller, Head of Private Client, at City law firm, Wedlake Bell, said:
“This Spring Statement, while not imposing any new tax burdens on people across the UK, did little to improve the current situation for many – and will certainly do nothing to stop the growing flow of internationally connected individuals looking to move out of the UK.
“The relocation trend began in March last year with the announcement of major reforms to the “non-dom” tax regime from 6 April 2025, and this along with the recent proposal by the government to cap inheritance tax Business Property Relief and Agricultural Property Relief, is causing many affected individuals to reassess the UK as their long-term home.”
Also commenting, Matthew Braithwaite, Head of Offshore, Wedlake Bell said: “Although we were not expecting any significant announcements in today’s Spring Statement on any further tax reforms, and we certainly did not get any, the Chancellor, Rachel Reeves, did however take the opportunity to reassert her claim that that the UK’s new residence-based regime which is due to come into force on 6 April, will be more attractive to new arrivals into the UK than the current non dom regime.
“Whilst time will tell on this, the attractiveness of the new regime should be equally measured by the effect it has had on those long term resident non-dom individuals who have decided to leave the UK as a result of the changes over the last 12 months, since the abolition of the non dom regime was originally announced; this coupled with the fact that many new arrivals who are attracted to the new regime are only likely to stay for four years under this regime, will only serve to create a more transient economic picture and is unlikely to fill the economic void left by non doms who have since left the UK.
“Although it is encouraging that Rachel Reeves confirmed that the government will continue to work with stakeholders to ensure the new regime is internationally competitive, the fact that this engagement to date has not led to some practical amendments to the reforms, and in some cases, only created more confusion, means that more meaningful dialogue is needed than what has so far been the case if this regime is to be truly competitive.”
Katharine Arthur, Partner, HaysMac said: “The Autumn Budget was the largest tax-raising Budget in over three decades, and the effects are still leaving individuals, businesses and the wider system reeling – even with many major tax changes only starting to take effect from next week. While the lack of further tax rises today is undoubtedly welcome, the reality is that the existing burden is still weighing heavy on thousands of businesses and individuals alike.
“The investment into cutting edge technology to crack down on tax evasion very much reflects an anti-avoidance theme we are noticing under this Government, and could support an under-resourced HMRC in closing the current tax gap. However, the absence of updates or clarity on whether changes to the non-dom regime will be softened is naturally disappointing. We are already seeing on-the-ground impacts of the changes with several wealthy individuals leaving the UK, and confirmation on how the final reforms could take shape is essential for advisors and individuals alike.
“Nevertheless, there are merits to the Chancellor’s commitment to just one major economic event. Any tax changes can result in significant upheaval to the system as a whole, and require Parliamentary consultation and HMRC to adapt to the practicalities. By sticking to the plan of just one major Budget each year, the Chancellor can at least offer more certainty and stability from a tax perspective, which is helpful in a time of wider economic uncertainty.”
Miles Dean, Partner and Head of International Tax at Andersen LLP, comments: “Unfortunately the Chancellor, Rachel Reeves, has failed to deliver anything in her Statement that could be described as inspiring. Her approach was to blame the previous government and tinker at the edges of government spending rather than grasp the nettle and introduce pro-business measures.
“Following a sluggish start to the year for the UK economy, the moment calls for bold measures to stimulate growth, specifically corporation and income tax relief for businesses and entrepreneurs. Given the OBR’s halving of the growth forecast from 2% to 1% for this year it is extraordinary that the Chancellor hasn’t sought to address this now. Whether she does in fact do this in the Autumn Budget is another question entirely.
“For all the rhetoric about growing the economy and making the UK reach its potential, nothing in Reeves’ statement inspires confidence. It points to a Chancellor and Government that are increasingly out of touch with reality and out of their depth. This is deeply concerning given the state of the economy.”
Sam Dewes, Tax Partner at top 15 accountancy firm HW Fisher, said: “In a blow to the Chancellor, the OBR revised down the UK’s growth forecast to just 1% for this year. Businesses will likely be frustrated by the Chancellor’s decision to proceed with the NI hike despite the downgraded growth outlook.
“While many will consider today’s announcement anticlimactic in terms of tax changes, there is some reassurance in the Government’s commitment to a single annual fiscal event, allowing people to plan with more confidence in the months and years ahead.”
“Despite no significant tax announcements, today’s Spring Statement reaffirms the UK’s challenging economic outlook,” says Karen Barrett, founder and chief executive of Unbiased, the UK’s leading platform for matching people with qualified financial experts. At Unbiased, we’re seeing more people nearing retirement or managing assets rethink their plans in response to current conditions and policy shifts.“
Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group said: “The Chancellor has remained true to her principle of sticking to one fiscal event per year and for many, it’s ‘as you were’ following the Spring Statement. However, the squeeze on the public purse is clear and it seems the stage is set for a more significant Autumn Budget. With formidable spending obligations and a firm stated commitment to obey its fiscal rules, unless we see a strong summer of economic growth the Government is likely to face a choice between further spending cuts and tax rises. It remains to be seen whether the Government’s pledge not to increase taxes on working people can survive the scale of the fiscal challenge outlined by the OBR. In the meantime, people should continue to make the most of the allowances on offer via tax efficient products like ISAs and pensions to maximise their take-home pay.
“There may be temptation to tinker around the edges and the reality is even apparently minor changes to the tax system, for example the plans to bring pensions into scope for Inheritance Tax (IHT) outlined at last October’s Budget, can be incredibly complex and raise issues around practicality. The IHT proposals have fundamentally altered how many better-off savers view their pension, and four in five (82%) financial advisers are now re-evaluating the role of pensions in client planning following the announcement1. With the majority of UK adults undersaving for retirement, it’s crucial that policy around long-term saving serves to increase confidence in the pensions system.
“The other major event this year is the Pension Schemes Bill where we are expecting a first draft within weeks. Previewed at the King’s Speech, the Bill will contain a number of significant developments designed to address pressing issues facing savers and the industry. The big-ticket initiative is the Chancellor’s drive for scale and a plan to consolidate the fragmented DC pension market into fewer, larger schemes to drive efficiencies and unlock investment opportunities both here in the UK and internationally. Another significant development is a plan to introduce default decumulation pathways in the occupation pensions world. We’re ten years on from the pension freedoms and in many respects this plan recognises that complexity of the decisions facing those at retirement and aims to provide an option that will deliver good outcomes for those who would prefer a ready-made solution. A scheme to address the issues of small pots is also in the works which recognises the proliferation we’ve seen since the introduction of auto-enrolment with the introduction of default consolidators. Despite pensions barely featuring in today’s statement, both parliament and the industry will be kept busy in the weeks ahead as this legislation progresses!
And on pensions, Ambery said: “The government is walking a tightrope between existing spending commitments and its own fiscal rules and the importance of efficiency and cost savings were a key feature of statement build up. Despite plans for a major overall of the welfare system, the main pensioner benefits have been spared much to the relief of those on fixed incomes. At an annual cost of nearly £140bn the state pension would have been an attractive but politically fraught area for cost saving, particularly given the government’s manifesto commitment to the triple lock. With March’s average earnings figure coming in at 5.8% including bonuses, there’s potential for a significant rise to the state pension in 2026. The sums of money involved are sure to make the state pension a focus of debate but for now at least it is business as usual.”
Steven Cameron, Pensions Director at Aegon, stated:
“The Chancellor’s Spring Statement included a single pensions mention relating to future changes to pension scheme investments. This is likely to lead to workplace pensions placing more of their members’ funds in investments designed to boost UK economic growth, while also hoping to deliver better returns for pension savers. We look forward to more detail in the Pensions Investment Review, due to report back next month.
“We hadn’t expected anything new on pensions in the Spring Statement, with the Autumn Budget the forum for announcing tax reforms, and details of the Government’s three-year Spending Review expected in June.
“We know further changes are coming in this summer’s Pension Schemes Bill which will include new measures to ensure all pensions offer good value for money and plans to consolidate small pension pots individuals may have left behind when changing employers. Furthermore, we expect new requirements for pension scheme trustees to go further in designing default retirement income strategies for members who do not want to make choices for themselves.
“Looking ahead, should budgetary pressures worsen, future changes to the State Pension cannot be ruled out. There is an ongoing review of the State Pension age, and government finances may necessitate further or faster increases. An increase to age 68 is already scheduled starting from 2044.
“We also can’t ignore the State Pension ‘triple lock,’ which has proven costly and unpredictable in recent years. While the government is currently committed to maintaining it, the formula might be adapted. Instead of annual increases being the highest of earnings growth, inflation, or 2.5%, a smoothing mechanism could be introduced. Pensioners might receive an inflation increase as a minimum, and if, over the previous three years, wage growth has on average been higher than inflation, they could receive an additional uplift. This would protect pensioner purchasing power and make future costs less unpredictable. But no State Pension mention in the Spring Statement is a case of ‘no news is good news’ at least in the short term.”
Lindsay James, investment strategist at Quilter said: “Today’s Spring Statement confirmed what has long been known about the UK economy – growth is weak and the public finances are in a hugely precarious situation. Without taking action today, Rachel Reeves would have broken her fiscal rules. But even with the tweaks announced the fiscal headroom that she has to play with going forward is not only miniscule, but risks being wiped out by the Autumn Budget given the ongoing pressures on the UK economy in addition to the growing threats to global trade. This caused bond yields to spike briefly, but these appear to have since settled once again.
“The Office for Budget Responsibility has also slashed its growth forecast in half, joining a long list of organisations to have already done so. Growth for 2025 will now just be 1%, and climb no higher than 1.9% in any year between now and the end of the decade. While these figures suggest the UK economy will continue to experience sluggish growth, even those figures are a potential best-case scenario as many others have forecast significantly worse. The Chancellor was keen to tout pro-growth planning policies and increased spending in defence, but frankly many of these policies will not produce the goods any time soon.
“Furthermore, the OBR’s forecast that inflation will average 3.2% this year and not return to target sustainably until 2027 will provide households and businesses with little comfort. We still do not know the full extent of the USA’s tariff regime, and should Donald Trump decide to be even more aggressive on this front than he already has been, then inflation at 2% becomes somewhat of a pipe dream.
“That said, today’s Spring Statement did not come attached with the substantial spending cuts some predicted. Cuts to government spending now mean real spending increases of 1.2% rather than the 1.3% that was planned, and is better than many thought possible. It does appear Reeves has found the necessary cuts without either increasing taxes or making deep cuts – the focus has instead been on a multitude of smaller areas.
“Ultimately, this was a Spring Statement that could have been a lot worse for the UK economy. Labour has perhaps learned its lesson that the economy requires a more positive tone from government, and that the burden placed upon businesses at the Budget was enough for now. How long this can last remains to be seen. As Reeves was keen to stress, much of it is out of her hands and down to the global economy.”
Lily Megson, Policy Director at My Pension Expert, said, “This Spring Statement reflects a difficult economic climate – now more than ever Government must do more to protect the most vulnerable in society and offer much-needed reassurance to savers.
“In such challenging times, decisive action is needed. Providing a clear timeline for the second stage of the pension review, for example, would have been a positive step. The Government must not lose sight of longer-term ambitions, particularly when it comes to the pension system.
“We hope to see the Government reaffirm its commitment to driving better outcomes for savers, and engaging with the industry to drive this forward. In doing so, sustainable change will be achieved, with more savers feeling supported to achieve the financial future they want.”
Commenting on today’s Spring Statement, William Marshall, Chief Investment Officer, Hymans Robertson Investment Services (HRIS) says: “Weaker GDP growth, lower tax take and higher gilt yields combined to erase the Chancellor’s headroom on her fiscal rules. The measures she took today restored that headroom to £9.9bn but that is still razor thin. The OBR halved its growth forecast for the year from 2% to 1%. The previous 2% figure looked overly optimistic compared to the consensus. 1% looks more reasonable and is closer to the Bank of England’s projections.
“Weaker than expected inflation, announced this morning, may give a slight boost to the Chancellor if it leads to further interest rate cuts from the Bank of England (thereby lowering of interest costs for the government).
“We expect gilt yields to remain volatile – for example, gilt yields initially fell on the inflation news. They then spiked during the Chancellor’s statement ( due to concerns around how small the fiscal headroom remains), before falling again, as data showed gilt issuance was lower than expected.
“For advisers the role that bonds can now play in investment portfolios, both in terms of targeting returns and managing risk, is important to consider. Opportunities associated with bonds are increasing as yields have risen, albeit investors will need to be careful in considering the timing of any allocations, alongside the specific bonds being considered.”
Commenting on the Spring Statement, Chris Cummings, Chief Executive of the Investment Association, said: “We welcome today’s commitment from government to boost the culture of retail investment, including looking at options for ISAs reforms that will get the balance right between cash and equities to earn better returns for savers. Our industry has long called for the government to create a culture of inclusive investment, which will see more people benefit from investing, and we’re pleased that the government has now heeded this call.
“Today’s statement also reiterates the central role of investment in delivering UK growth, in light of the challenging circumstances facing the UK economy and households. Investment managers are already playing an active role to deliver growth by channelling £1.4 trillion to UK businesses, infrastructure and social projects annually. We agree with the Chancellor that innovation is a key enabler of growth and are delivering on this through our FinTech accelerator and work with the government and regulator on fund tokenisation and AI.”
Commenting on further welfare cuts, Julia Turney, Head of Platform and Benefits at Barnett Waddingham says: “With harsher welfare cuts looming – including a cut to the health element of Universal Credit incapacity benefits, followed by a freeze – the pressure on disabled individuals is about to get even worse. The Government is pushing more disabled people into work, yet new research from BW is clear; disabled employees face significantly worse outcomes. 79% experience burnout, almost double the rate of their non-disabled peers, and 86% of those with physical disabilities report work-related health issues.”
“If more disabled individuals are being forced into work while losing financial support, employers must act fast to adapt. This means ensuring reasonable accommodations, flexible working arrangements, and targeted mental health support are in place. Failing to do so won’t just harm employee wellbeing – it will drive higher turnover and lower productivity, creating a lose-lose situation for everyone.”
Glenn Collins, Head of Technical and Strategic Engagement at ACCA said: “ACCA welcomes the announcement of additional investment in the digital capability of HMRC, with a focus on tackling tax evasion, however, we still see high levels of frustration with HMRC services from professional tax agents and taxpayers.
ACCA reiterates its stance that HMRC investment also needs to tackle key issues such as poor customer service and lengthy response times. Without this, the tax system will not be able to cope with the demands of Making Tax Digital and the UK’s increasingly complex tax landscape meaning errors become more commonplace.
ACCA continues to call for the use of professionally qualified agents to support complex queries, and improvements to communication first and foremost.”
Chancellor Rachel Reeves, has pledged to step up efforts in cracking down on tax evasion. The government plans to introduce measures aimed at increasing tax fraud prosecutions by 20%, raising approximately £7.5bn in additional revenue. These plans include investing in more compliance staff for HMRC and leveraging advancement in technology to detect tax fraud more effectively. Commenting on these changes, Michelle Sloane, Partner at global law, RPC, said: “This announcement is unsurprising given last month the Public Accounts Committee issuing a scathing report, calling for the government to have a clear strategy to tackle tax evasion and increased powers for public bodies to address fraud, given they considered the £5.5billion which HMRC estimated was lost to tax evasion in 2022-2023, could be a significant underestimate. HMRC have significant powers at its disposal to tackle tax evasion, however, it has not been making full use of these powers. HMRC criminal prosecutions for tax evasion has decreased by more than 50% from 749 cases in 2018/19, to only 344 in 2023/24. This reduction raises serious concerns about the diminishing deterrent effect of HMRC’s enforcement actions. It will be important for HMRC to set specific objectives and measurable targets to achieve its stated aims as its current powers and resources are not being used effectively.”
Lucy Dunbar, Partner at Sackers, the specialist law firm for pensions and retirement savings, commented: “In today’s Spring Statement, the Chancellor Rachel Reeves focused on Government priorities designed to cut spending and boost growth. Whilst unlocking DB surpluses and other workplace pensions reforms are seen as key components in achieving the latter, today’s speech was missing any pensions specifics; only including a nod to increasing investment via reforms to the pensions system.”
“Once implemented, proposals to introduce a statutory power to deal with surplus should help to address existing complexities, such as restrictions in scheme rules on paying surplus to employers or tax rules preventing one-off member payments. Levelling the playing field in this way should provide DB trustees and employers with more choice, including making the prospect of running on a maturing scheme more viable.
“Details of the Government’s surplus policy will be included in the DWP’s response to its DB options consultation which is expected to be published in the spring. With a new Pension Schemes Bill also on the cards, it is quite possible that the two will make their appearance in tandem.”
Marc Acheson, Global Wealth Specialist at Utmost Wealth Solutions, said: “Rachel Reeves stated that she has restored full headroom against the ‘stability rule’ through spending cuts rather than raising taxes and that the Government will be running a surplus of £9.9bn by 2029-30. However, with the OBR slashing growth forecasts in half for 2025, the risks are to the downside. Her headroom is wafer-thin and if economic conditions deteriorate and that headroom evaporates, it could pave the way for future tax rises later in the year if spending cuts prove insufficient to plug gaps.
“There was nothing in this statement to stem the flow of non-doms, many of whom have been leaving to more favourable jurisdictions following the removal of IHT protections on existing settlements announced in the Autumn Budget. As a result, we can expect to see a continuation of non-doms and HNWs exiting the UK in the coming years, with significant ramifications for future tax receipts.”
Reacting to the Chancellor’s confirmation of no new tax rises, Kevin Smith, Chief Technology Officer at Lucanet, says: “The real challenge isn’t just about adapting to things like the National Insurance hike, it’s the broader economic instability and uncertainty that has become the new normal. Fiscal policies and regulations are evolving rapidly – as well as being scrapped or rolled back – making it increasingly difficult for finance teams to plan with confidence.
“Compounded by the use of outdated technology, siloed data and manual processes, CFOs and financial directors are often flying blind when it comes to budgeting and forecasting and then scrambling to adapt to last-minute changes.
“While the Chancellor hasn’t introduced any direct tax rises, this isn’t to say there won’t be big policy announcements further down the line. Businesses need to be on the front foot when it comes to scenario planning and they must focus on building agility into their financial strategies now. That means investing in the right tools and technology to enable rapid response to shifting economic conditions.”
Charlie Precious, Principal at Ryan, the global tax services firm, said: “Today’s Spring Statement was largely what the Chancellor promised, a non-fiscal event and in this case, no news is good news. After a period of constant change, many will welcome a sense of stability.
“However, the significant downgrade in the UK’s OBR growth forecast from 2% to 1% will understandably raise alarm bells for many businesses already navigating a challenging economic climate.
“Now more than ever, companies must ensure they’re not leaving money on the table, only paying exactly what they should be paying. That means utilising every available tax relief and incentive, such as full capital expensing and R&D tax relief, while also embracing the latest tax technology tools to ensure accuracy, compliance, and efficiency. These tools can make a huge difference in managing costs in a slower-growth environment.”
Chris Rudden, Head of Investment Consultants at Moneyfarm said: “We’re pleased to see that the Chancellor kept her word and left the cash ISA alone. While an argument can be made that people allocate too much of their hard-earned savings in cash, and that they should instead be encouraged to invest with a long-term perspective, allowing individuals to keep a portion of their savings in cash for the short-term remains an important element of any investment strategy.
“If the government wants to take away this precious allowance in order to find a way to boost UK growth, they need to come up with a solid framework for how people can invest their money into growth projects, without taking undue risk and in a way they can understand. Simply pushing people into stocks & shares Isas would probably lead to more people investing in global equity markets. Even if they bought listed UK equities, the money would only go to other investors, not to the companies themselves. So, half of the solution seems to still be missing.
“While the cash ISA is safe for the time being, there is no guarantee that reforms may not be announced in the Autumn Budget later this year. Savers would be wise to consider maximising contributions in the first few months of the new tax year to protect themselves against future changes.”
What were the Mortgage and Property market implications?
Wondering what did the Spring Statement mean for the Mortgage and Property markets? For all the industry comments on this key segment check out our coverage below, where we’ve segmented the comments relevant to this important sector.
