The Spring Statement 2025, introduced by Chancellor Rachel Reeves, comes with a strong focus on fiscal discipline, economic growth and government reform.
New Fiscal Rules
At the heart of the Spring Statement 2025, are two key fiscal rules:
- Balancing the budget by 2029/30, where the government plans to ensure day-to-day spending is fully covered by tax income.
- Reducing national debt, as debt levels are expected to fall by the end of the forecast period.
These rules aim to prevent excessive borrowing. The Chancellor highlighted the lessons learned from past financial missteps, emphasising the need for stability.
Budget Deficit Turns into Surplus
The Office for Budget Responsibility (OBR) confirmed that the government will move from a £36.1bn deficit in 2025/26 to a £9.9bn surplus by 2029/30. This change will help meet fiscal goals two years ahead of schedule, reinforcing confidence in the UK economy.
Tackling Tax Evasion and Fraud
The Spring Statement 2025 includes tougher measures on tax evasion. The government will increase prosecutions by 20% and aims to recover an additional £7.5bn. Importantly, there are no new tax hikes planned as a result.
Welfare Reforms
Changes to Universal Credit include:
- A rise in the standard allowance from £92 in 2025/26 to £106 by 2029/30.
- A 50% cut and freeze to the health element for new claimants.
These reforms will save an estimated £3.4bn, according to the OBR.
Boosting Growth and Investment
To support economic expansion, the government is:
- Increasing capital investment by £2bn annually.
- Launching major planning reforms to speed up development.
- Creating a £3.25bn transformation fund for public services.
Planning reforms are set to drive the construction of 1.3 million homes within five years, helping meet the target of 1.5 million homes in England during this Parliament.
Defence Spending and Efficiency Savings
Defence spending will rise to 2.5% of GDP, with a portion going toward AI and drone technology. This increase will be funded by reducing overseas aid to 0.3% of gross national income.
At the same time, the government aims to cut the cost of running government by 15% by 2030. This includes:
- Voluntary civil service exit schemes.
- Investment in AI and digital tools for justice and care services.
Economic Growth and Inflation
Although growth for 2025 was revised down from 2% to 1%, the government remains optimistic. Forecasts predict steady growth:
- 1.9% in 2026
- 1.8% in 2027
- 1.7% in 2028
- 1.8% in 2029
Inflation, once at 11%, is expected to return to the 2% target by 2027, creating a stable environment for growth.
Education and Skills
To support future workforce needs, £600m will be spent to train up to 60,000 construction workers. Ten new technical colleges will be established across the UK.
Contact Us
We are not just accountants; we are Chartered Accountants with one of the most reputable and premium accounting bodies. We are registered and regulated by ACCA; so you can rest assured that you are in good hands. Knowing this, don’t hesitate to get in touch with us if you require assistance: Pi Accountancy | Contact Us