Rachel Reeves delivered her Spring Statement today, 26th March 2025, the chancellor says the government’s task is to “secure Britain’s future in a world that is changing before our eyes”.
Chancellor Rachel Reeves says the 2025 growth estimate for the UK has been halved to 1% from 2% by the government’s official forecaster, the Office for Budget Responsibility (OBR). In the long term, however, the OBR says there will be GDP growth year on year until 2029/30.
The OBR predicted inflation would rise to an average of 3.2% next year before the rate starts to fall. It is expected to reach the Bank of England’s 2% target from 2027 onwards.
The statement didn’t include any further tax increases, but the announcement of cutting-edge tech will help HMRC crackdown on tax avoidance, raising £1 billion.
Reeves announced £1bn for employment support to help people back into work, as well as £400m to support jobcentres. The OBR estimates that her welfare cuts package will save £4.8bn by 2029-30, with welfare spending falling as a share of GDP from next year.
On capital spending, £3.25bn of investment has been brought forward for a new “transformation fund” to bring down the cost of running government by making public services more efficient; the first allocation from the fund is for AI tools to “modernise” the state.
The government is supporting growth by investing £13 billion more in capital infrastructure over the next five years, launching a construction skills package to train up to 60,000 more skilled workers, and investing an additional £2 billion in social and affordable housing.
Defence funding will be boosted by £2.2 billion, to be invested in new innovative equipment including air defence lasers for Royal Navy ships. Reeves vowed to make the UK “a defence industrial superpower”.
For more information read the full Spring Statement here: https://www.gov.uk/government/organisations/hm-treasury