Spring Statement 2025: Economic Stability and Future Growth?

On March 27, 2025, Chancellor Rachel Reeves delivered her Spring Statement, aiming to provide stability for the economy and security for working people. This statement continues the theme from Labour’s first Budget in the Autumn.

Summary

The Spring Statement 2025 focused on maintaining economic stability and addressing key areas such as taxation, investment, infrastructure, housing, and planning. No new tax changes were announced, but the effects of the Autumn Budget are still being felt. Significant investments were made in defence, government efficiency, reducing the welfare bill, and infrastructure projects. Changes to the National Planning Policy Framework (NPPF) are expected to facilitate the construction of new homes, stimulating economic growth.

Tax Implications

In keeping with the promise of having only one major fiscal event a year, no new tax changes were announced. However, the effects of the Autumn Budget are still being felt. Starting April 6, employer’s national insurance contributions will increase, and the starting threshold will decrease. Additionally, the national minimum wage will rise next month. These changes may lead to price increases, lower margins, or reduced recruitment as businesses adjust to higher costs.

From a personal tax perspective, significant changes are on the horizon. Inheritance tax changes will take effect in April 2026, reducing the rate of agricultural and business property relief on assets over £1 million. Furthermore, from April 2027, most pension funds will be subject to inheritance tax. The Chancellor also announced continued investment in tackling tax evasion, with a goal to charge 20% more tax fraudsters per year and collect an additional £1 billion in tax.

Investment and Infrastructure

The statement included major announcements regarding investment in defence, government efficiency, reducing the welfare bill, and infrastructure spending. The growth forecast for the current year has been halved from 2% to 1%, but the forecast for 2026-2029 has been upgraded since the Autumn Budget.

For regional development, a £9 billion investment in the Lower Thames Crossing was approved, linking Tilbury in Essex and Gravesend in Kent, which should ease pressure at the Dartford Crossing. Additionally, the Naval dockyard in Portsmouth will be regenerated. These projects may present opportunities for businesses in these areas to become part of the supply chain.

Housing and Planning

Changes to the National Planning Policy Framework (NPPF) are expected to make it easier to build new houses, with an estimated 1.3 million new homes to be constructed over the next five years. This could stimulate economic growth, and it will be interesting to see whether these changes make planning easier and whether developers consider potential projects financially viable.

Conclusion

The Spring Statement 2025 highlights the government's commitment to economic stability and future growth. By addressing key areas such as taxation, investment, infrastructure, housing, and planning, the statement aims to provide a solid foundation for the economy and security for working people. The announced investments and changes present opportunities for businesses and individuals to adapt and thrive in the evolving economic landscape.

As we move forward, it's crucial for businesses and individuals to stay informed and proactive in adapting to the changes announced in the Spring Statement. Whether it's adjusting to new tax implications, exploring opportunities in regional development projects, or considering the impact of housing and planning changes, staying engaged and responsive will be key to navigating the future successfully.