As the UK prepares for the Spring Statement this Wednesday, 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 tomorrow’s 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.”
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.”
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,” he advises. “We anticipate further discussion around spending cuts, but the government will likely avoid drastic tax changes this week.”
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.
Conclusion
While tomorrow’s 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 tomorrow afternoon, here on IFA Magazine. So, for everything that advisers need to know just check in with us tomorrow using this dedicated Spring Statement section of our website. See you there!