Spring Statement 2025: What You Need to Know

Newsletter   Spring Statement 2025: What You Need to Know Earlier today, Chancellor Rachel Reeves delivered her first Spring Statement, setting out the government’s latest plans for the economy, public services, housing and more. With a focus on stability, growth and long-term reform, the statement outlined key changes that could affect everything from homebuilding and defence to tax and welfare. We’ve summarised the main announcements below so you can quickly understand what’s changing. Economic Outlook and Fiscal Position The UK economy is forecast to grow by 1.0% in 2025, rising to 1.9% in 2026, with growth upgraded from previous forecasts for every year after 2025. Inflation is expected to peak at 3.8% in July 2025, before falling close to the 2% target from mid-2026 onwards. The government is forecast to meet its fiscal rules (stability and investment) two years early, with the current budget in surplus by £9.9 billion in 2029-30. Public sector net borrowing is forecast to fall from 4.8% of GDP in 2024-25 to 2.1% in 2029-30. Defence and Security Defence spending will rise to 2.5% of GDP by April 2027, with a £2.2 billion increase in the MOD budget for 2025-26. The government plans a further rise to 3% of GDP in the next Parliament, subject to economic conditions. Investment includes enhancing military capabilities and establishing UK Defence Innovation (UKDI) with a £400 million ringfenced budget starting July 2025. Housing and Infrastructure An additional £2 billion will be invested in social and affordable housing in 2026-27, expected to deliver up to 18,000 new homes. Planning reforms through the National Planning Policy Framework (NPPF) are projected to result in 170,000 additional homes by 2030 and add £6.8 billion to GDP by 2029-30. The Planning and Infrastructure Bill aims to streamline planning for housing and critical infrastructure. Skills and Construction A £625 million construction skills package will train up to 60,000 additional workers, supporting the government’s goal to build 1.5 million homes in England during this Parliament. Investment includes skills bootcamps, construction apprenticeships, and Technical Excellence Colleges. Tax and Compliance HMRC will recruit 500 additional compliance staff and 600 debt management staff, aiming to increase tax collection and reduce the £44 billion stock of tax debt. Making Tax Digital (MTD) will be extended to self-employed and landlords with income over £20,000 from April 2028. Penalties for late tax payments will increase from April 2025. New consultations have been launched on tax adviser regulation, data use, avoidance promoters, and simplifying penalties. Welfare Reform The Universal Credit health element will be cut by 50% for new claimants from April 2026, and frozen for existing claimants until 2029-30. The standard Universal Credit allowance will rise above inflation from 2026-27, reaching £106 per week in 2029-30 for single adults over 25. Work Capability Assessment reassessments will restart, and Personal Independence Payment (PIP) eligibility will be tightened. These reforms are expected to save £4.8 billion from welfare spending by 2029-30. Public Services and Reform A £3.25 billion Transformation Fund will modernise public services using digital technology and AI, with early investments in fostering, probation services, and AI pilot projects. NHS England will be brought back into the Department of Health and Social Care to reduce bureaucracy. Departments will reduce administrative budgets by 15% by the end of the decade, saving £2.2 billion annually. Capital Investment and Growth Strategy An additional £13 billion in capital investment has been allocated this Parliament. Funding includes £4.8 billion for the Strategic Road Network in 2025-26 and support for infrastructure such as West Yorkshire Mass Transit. A modern Industrial Strategy and a 10-Year Infrastructure Strategy will be published at the Spending Review on 11 June 2025. International Development and ODA Official Development Assistance (ODA) will be reduced from 0.5% to 0.3% of GNI by 2027, freeing up funds to meet the defence spending target. The government remains committed to returning to 0.7% of GNI when fiscal conditions allow. Source: Click Here   All the information in this article is correct as of the publish date 26th March 2025. The opinions expressed in this publication are those of the authors. The information provided in this article, including text, graphics and images does not, and is not intended to, substitute advice; instead, all information, content and materials available in this article are for general informational purposes only. 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