As the UK prepares for the Spring Statement, speculation is mounting over what Chancellor Rachel Reeves will deliver.
While not an official fiscal event, the statement will offer key insights into the government’s economic outlook and provide updated forecasts from the Office for Budget Responsibility (OBR). With businesses, investors, and homeowners eager for clarity, leading voices in finance and economics have shared their expectations and concerns ahead of the statement this week as follows:
Paul Clifton, Wealth Planning Director at Arbuthnot Latham kicks things off for us, exploring the potential fiscal measures, economic forecasts, and government priorities in this pivotal update as follows below:
How will the Spring Statement differ from a Budget?
Technically, the Spring Statement is not designed to act as another Budget and is not expected to introduce significant economic changes. According to the Treasury, the UK plans to limit itself to one major fiscal event annually – the Autumn Budget.
However, there is speculation that Chancellor Reeves might leverage this occasion to unveil new measures aimed at balancing public finances and reinvigorating the economy.
Economic context and challenges
Recent data from the Office for National Statistics reveals that the UK economy experienced minimal growth of just 0.1% in the final quarter of 2024, following stagnation in the previous quarter. Additionally, the Bank of England has revised its growth forecast for 2025, lowering expectations from 1.5% to 0.75%, signalling a slowdown in economic momentum.
These headwinds are likely to shape the tone and content of the Spring Statement.
Potential announcements in Reeves’ Spring Statement according to Clifton might be:
- Spending cuts over tax rises:
Reports suggest that the government may lean towards spending cuts rather than introducing new tax hikes. Welfare cuts, Whitehall efficiency measures, and planning reforms are among the areas being considered.
The Spring Statement may include extensions to the freeze on income tax and National Insurance thresholds, potentially lasting beyond 2028-29, to raise additional revenue. Speculation also surrounds possible changes to inheritance tax thresholds and ISA contribution limits to address fiscal challenges and encourage savings. These measures aim to balance economic stability with long-term fiscal discipline.
- Support for businesses:
While businesses have faced challenges such as increased National Insurance contributions, there is speculation about potential relief measures. These could include adjustments to the Employment Allowance or targeted support for sectors like agriculture and charities.
- Infrastructure and growth initiatives:
The government’s ambition to create ‘Europe’s Silicon Valley’ between Oxford and Cambridge may feature prominently. This initiative aims to boost the economy through infrastructure improvements and streamlined planning regulations.
- Fiscal discipline and long-term planning:
The Chancellor is expected to emphasise fiscal discipline, balancing short-term borrowing needs with long-term economic stability. This may involve revisiting controversial tax policies introduced in the Autumn Budget, such as inheritance tax reforms.
Balancing act: Anticipating changes and challenges in the upcoming Spring Statement
Many of Rachel Reeves’ policies announced in the October budget have faced significant backlash. While there is pressure on her to reconsider certain measures, such as the inheritance tax on business assets and changes to National Insurance contributions, the overall sentiment leans towards scepticism about any major reversals. Financial analysts and investors express cautious optimism, acknowledging the delicate balance the government must maintain to foster investor confidence.
Any changes to tax policies, such as inheritance tax or capital gains tax, may impact high-net-worth individuals and their financial planning strategies. Additionally, any measures aimed at stimulating economic growth could influence investment opportunities and market dynamics.
As we await the Chancellor’s announcements, staying informed and proactive will be key for navigating the evolving economic landscape. The Spring Statement promises to be a pivotal moment, offering insights into the government’s priorities and the direction of the UK economy in the months ahead.
More Economic Forecasts in Focus
One of the most anticipated aspects of the Spring Statement is the OBR’s revised economic projections.
On the agenda for Tom Stevenson, investment director, Fidelity International, is patching up the public finances as he comments: “Rachel Reeves, the Chancellor, will stand up on Wednesday to give one of her more difficult speeches. Her first Spring Statement is a follow up to last autumn’s unpopular tax-raising first Budget.
“Six months ago, she left herself almost no wriggle room to hit her self-imposed fiscal rule limiting public spending to the amount the government raises from taxes by the 2029/30 tax year.
“She had a £10bn buffer but sluggish growth, lower tax revenues and higher borrowing costs have wiped that out. The Office for Budget Responsibility will estimate this week that she is £4bn short of what she will need in four years’ time. To plug that gap and rebuild the cushion she will need to find £15bn. And because she has vowed not to raise taxes again, just half a year after the last tax bombshell, she will have to do that through spending cuts.
“The government has already announced £5bn of welfare spending cuts, so Wednesday will see her outline the other £10bn. Some will come from redirecting overseas aid to capital spending on defence, which falls out of remit of the current spending rule. Better tax compliance will find another billion or so. But that will still leave around £7bn of cuts to Whitehall departments, including thousands of civil service job losses. It won’t be called austerity, but it will certainly feel like it.”
Tony Whincup, Head of Investment Specialists, at TrinityBridge said: “Chancellor Rachel Reeves is expected to announce a range of spending cuts in this week’s Spring Statement. The news that government borrowing last month was higher-than-expected may jeopardise Reeves’s attempt to stick to her self-imposed fiscal rules: not to borrow to fund day-to-day public spending and to have debt as a share of UK GDP falling by the end of the current parliament in 2029/30. Some announcements were trialled last week, with Work and Pensions Secretary, Liz Kendall, earmarking changes to the welfare system which may save £5bn by the end of 2030. The challenging political choices for the government are clear to see; prime minister, Keir Starmer, has already announced cuts to the international aid budget in order to increase defence spending, as well as the decision to abolish NHS England in order to improve efficiency. The latest forecasts from the government’s fiscal watchdog, the Office for Budget Responsibility (OBR), will be set out to Parliament at Wednesday’s Spring Statement, with estimates of current tax receipts and public spending feeding into its forecast of whether the government is likely to keep to its fiscal rules. At the time of the Budget in October, the OBR models suggested that Reeves had c.£9.9bn headroom against her borrowing rules, however this is now expected to have been eroded completely.”
Sharing his views ahead of the Statement tomorrow, Pete Glancy, Head of Pension Policy, Scottish Widows said: “The Spring Statement should focus on indicators of how the economy has been doing, such as GDP growth, inflation, tax, Government spending and borrowing. While I’m hoping for some exciting news in areas such as Productive Finance, Value for Money and Defaults in Decumulation in the next couple of months, I think in keeping with tradition, we are less likely to see the statement used as a platform for new policy announcement beyond tweaks to the public finances.
“It could still mean that anything we do hear on the day could have an impact on things like saving, investing and pensions. The relative performance and attractiveness of our economy could influence asset allocations either towards or away from the UK. Indicators of a recession often favour bonds over equities, and vice versa when things have been predicted to boom. Short-term interest rates trending down could shift people from cash ISAs towards equity ISAs, and longer-term interest rates remaining high may favour annuities over income drawdown. “The trick is to translate what is announced on the day into how it might play out into customer behaviours and customer demand. Then we can look at ways to fine our propositions to best meet evolving customer needs.”
What about the Property Market?
Mark Michaelides, Chief Commercial Officer at Molo, emphasises that these forecasts, particularly concerning inflation and government borrowing, will set the tone for broader market sentiment in the property market commenting:
“The Buy-to-Let (BTL) market remains highly sensitive to these indicators,” he explains. “While we don’t expect significant policy announcements, we’ll be looking for details on the government’s housebuilding targets and green initiatives to support EPC improvements.”
Michaelides also highlights the potential for first-time buyer support to offset upcoming changes to the stamp duty threshold. Additionally, he awaits the Financial Conduct Authority’s consultation on stress test rules, which could be shaped by the government’s ‘pro-growth’ approach.
Also sharing his thoughts about implications for the property market, Timothy Douglas, Head of Policy and Campaigns at Propertymark, said: “With housing playing a key part in the UK Government’s plan for change, the Spring Statement must ensure government policy protects the delivery of more social and affordable housing and local authorities have the resources they need across planning, enforcement and infrastructure.
“Policymakers must also fully understand the need to reform housing benefits so they reflect real rental costs, and the UK Government must continue to target resources to tackle the cladding crisis and improve building safety to help boost economic growth.”
Tony Hall, Head of Business Development at Saffron for Intermediaries, shared his outlook and wishlist of three things he’d like to see announced as follows:
“Early reports suggest that we’re unlikely to see any major housing announcements in the Spring Statement. While we understand the economic pressures the government faces, we urge Rachel Reeves to look beyond immediate challenges and focus on long-term solutions. At Saffron, we see three key areas for action:
1. Extend stamp duty concessions There’s a significant bottleneck of deals as the stamp duty deadline approaches in early April. We’re hearing from brokers that transactions started as early as January may not complete in time. We urge the government to extend the deadline to support the estimated 75,000 homebuyers at risk of missing out and facing higher tax bills.
2. Boost homebuyer affordability Following the FCA’s reminder about lender flexibility, we’d like to see the government increase the LTI limit – or scrap the cap altogether, allowing lenders to set their own boundaries, so long as they can demonstrate they are lending responsibly. Additionally, greater recognition of rental payment history as evidence of affordability would help more buyers get on the ladder.
3. Expand housing stock “A key barrier for homebuyers is actually rooted in the very start of the process: property development. Developers face a number of significant challenges from inconsistent planning rules to labour shortages. One change that could make a lot of difference would be standardising planning processes across local councils to remove inconsistency between boundaries. Meanwhile, putting schemes in place to encourage more young people into trades would strengthen the workforce and support the delivery of the government’s 1.5 million homes target.
“While we appreciate the economic backdrop, a lack of meaningful housing policy could further dent market confidence – a risky move given the property sector’s crucial role in driving economic growth.”
Luther Yeates, Founder and Head of Mortgages at Orton Financial said: “In normal times, you would expect rates to be cut, stimulating growth. The Bank of England is bound by its inflation target. So, they will keep the base rate high, which in turn creates a high interest rate environment.
“Despite suggestions the UK’s economic stagnation could extend for the rest of the year, lenders still have an appetite to lend, and are seeking new ways to do so. We have even seen some high street lenders shift into the specialist lending space as everyone searches for new business opportunities. This includes higher income multiples, relaxed interest-only policy and foreign currency income. There will also be changes behind the scenes, as lenders are constantly reviewing their acceptance of adverse credit.
“If the economic forecast is pessimistic, lenders are likely to price-in any perceived economic downturn, as they are more likely to see an increase in the number of defaults, or borrowers who require additional help. During COVID, many lenders were crippled by the influx of requests for support – something they would actively seek to avoid in the future. Higher rates will keep the volume of transactions down.
“There is never a good time to buy. Instead, there is simply the right property for you, at the right price. If buyers wait for interest rates to improve, we will see accelerated house prices. It is a buyers’ market at present, with uncertainty going forward.”
Concerns from Entrepreneurs and SMEs
For entrepreneurs and small businesses, the Spring Statement presents an opportunity to reassess tax policies and economic incentives. Jamie Roberts, Chief Investment Officer at YFM Equity Partners, voices concerns over the government’s approach to Capital Gains Tax (CGT).
“The Autumn Budget left a sour taste for many entrepreneurs,” Roberts states. “The rise in CGT not only increases the cost of success but also widens the retirement funding gap. Many business owners reinvest profits rather than saving for pensions, and these tax hikes threaten their long-term financial security.”
Roberts warns that discouraging entrepreneurship through higher taxes could stifle investment and innovation. With SMEs accounting for 60% of private sector jobs, he argues that the government must rethink CGT increases and introduce fairer incentives for those building and exiting businesses.
Sharing her thoughts on what might be in store for SMEs, Hannah Fitzsimons, CEO of Cashflows said: “Small businesses are the backbone of the UK economy, but in 2025 so far, the financial landscape is becoming increasingly challenging. The funding gap for SMEs is widening, and we’re seeing alarming statistics: 40% of SMEs have been forced to pause operations due to a lack of finance, while over a third face the risk of closure. With traditional lenders tightening their purse strings and economic uncertainty persisting, business owners must explore alternative funding solutions to secure their future.”
“We didn’t see much relief for the UK’s companies, big or small, in the last budget, and there hasn’t been any indication that it will come in the next. The UK government has limited options to manage current challenges other than cutting expenditure, and this means that the relief that the country’s small businesses need may not be coming. One of the key things that businesses need is funding: companies need it to start in the first place and to keep going through difficult times.”
“The impact of inadequate funding is far-reaching. It not only threatens business survival but also stifles innovation, limits job creation, and hinders economic progress. As SMEs brace for financial pressures throughout this year, it’s imperative that they have the right support and funding tools to navigate these turbulent times. At Cashflows, we remain committed to empowering businesses with smarter, more accessible financial solutions—because when SMEs thrive, so does the wider economy.”
Fiscal Rules and Spending Constraints
Richard Flax, Chief Investment Officer at Moneyfarm, outlines the government’s fiscal rules and their implications. Under current Treasury guidelines, day-to-day spending must align with revenues by 2029/30, and public debt must decline as a percentage of GDP.
“The OBR is likely to downgrade its economic growth estimates, mirroring similar moves by the US Federal Reserve,” Flax explains. “This will present challenges for the Chancellor, who has already made tough spending cuts to meet fiscal targets.”
While some argue that these rules should be revised, Flax notes that credibility in financial markets is crucial, particularly in light of the market turmoil seen under Liz Truss’s administration.
Implications for Investors and Savers
For investors, Flax expects few surprises in the Spring Statement, with major tax changes more likely to be announced in the Autumn Budget.
“Savers should continue to maximise tax-free allowances through ISAs and SIPPs,” Flax advises. “We anticipate further discussion around spending cuts, but the government will likely avoid drastic tax changes this week.”
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 would be wise to incentivise people to save and invest by increasing the capital gains tax (CGT) allowance. Current speculation suggests a contrarian pathway by which Rachel Reeves could reduce CGT, dividend and ISA allowances. Such a move may be harmful to Brits who have already suffered under a high inflationary environment over the past few years.”
Lily Megson, Policy Director at My Pension Expert, said, “The surprise drop in inflation will bring light relief for the many households grappling with financial uncertainty. After years of economic turbulence, any sense of stability and a lower cost of living will be welcomed.
“That said, the long-term impact of high inflation is still being felt. Many savers are finding their budgets remain stretched, and concerns about whether their pension savings will be enough to support a secure retirement are far from resolved. Britons need clear reassurance about the economic future and pathways to financial advice if they are to commit to long-term financial planning with confidence. “Therefore, the Chancellor’s Spring Statement this afternoon must acknowledge the strain people continue to face. There needs to be a clear, practical plan to help people save adequately and protect their pension income in real terms. Anything less would be a failure to meet the moment — and retirement savers will pay the price.”
The Broader Economic Picture
Rebecca Harding, Chief Economist at DSR Bank, underscores the evolving economic threats facing the UK. She calls for a shift in funding strategies to address underinvestment in critical infrastructure, particularly in defense and security.
“The fiscal constraints facing Rachel Reeves are significant, but the economic landscape has changed drastically in the past six months,” Harding says. “We need innovative funding solutions that won’t spook markets but will address long-term investment shortfalls.”
She advocates for the government to support multilateral financing structures and bolster national investment programs to ensure economic resilience.
Marc Acheson, Global Wealth Specialist at Utmost Wealth Solutions, said: “It is now looking increasingly likely that Rachel Reeves will opt for spending cuts rather than tax rises. However, with the OBR slashing its forecasts, this may have all but wiped out the Chancellor’s fiscal headroom. This leaves the door open to more tax rises in the Autumn if growth remains anaemic and spending cuts alone aren’t enough to meet her fiscal rules.
“Most concerning though is that the UK may have already reached a tipping point in wealth outflows which will impact tax receipts. Ever since the measures announced in the Autumn Budget that removed IHT protections on existing settlements, non-doms and HNWs have been leaving to more attractive destinations such as the UAE, Italy, Switzerland, Portugal, Greece who are competing aggressively to welcome families through a combination of flat taxes and lack of IHT. With no reversal or changes to these measures, more non-doms and HNWs will exit at a greater rate than average in the coming years.
“Conversely, one interesting trend that we are starting to see develop is HNWs coming from the US, which goes against perceived wisdom given the US administration is seeking to lower taxes on HNWs.”
Also commenting on the broader picture, Andy Butcher, Branch Principal & Chartered Financial Planner at Raymond James Investment Services said: “Business confidence was impacted by the Chancellor’s Autumn budget. As a result, she may refrain from looking to raise revenue from businesses once more. Given that she has pledged to not increase the tax burden on working people, the Chancellor will likely opt for a tax hike by stealth by freezing thresholds. This policy would do little to turbocharge meaningful growth and instead entrench stagflation more deeply.”
“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 may also add complexity to the current situation, further incentivising business owners to sell up, defeating the purpose of a pro-growth policy.”
Conclusion
While the 2025 Spring Statement seems unlikely to introduce major policy changes, it will provide crucial economic forecasts and set the stage for future government decisions. From housing and business tax policy to public spending and infrastructure investment, the outlook presented by Reeves will influence market confidence and economic planning for months to come. With the Autumn Budget looming and the global uncertainty at heightened levels, all eyes will be on the government’s next steps in shaping the UK’s economic future.
Stay Tuned for Live Updates and Expert Analysis!
We’ll be covering all the latest news and views during and after the Spring Statement here on IFA Magazine. So, for everything that advisers need to know just check in with us using this dedicated Spring Statement section of our website. See you there!
