(qlmbusinessnews.com . Fri 21st Mar, 2025) London, UK —
“No New Tax Rises? Chancellor Reeves to Announce Spending Reforms in Spring Statement”
The Chancellor is set to deliver her Spring Statement on 26 March, outlining the government's plans for the UK economy and an updated economic forecast. While no additional tax rises are expected, significant spending changes are on the agenda as the government seeks to stabilise public finances amid global uncertainties.
Chancellor Rachel Reeves is preparing to announce key welfare reforms—including proposed cuts aimed at saving £5bn a year by 2030—and adjustments to various department budgets. Among the changes under consideration are tougher assessments for Personal Independence Payment (Pip) claims and modifications to Universal Credit, with the aim of reducing the soaring welfare bill.
The Treasury is also expected to update the Office for Budget Responsibility (OBR) on its “major measures” to meet self-imposed borrowing rules. These rules, which prohibit borrowing for day-to-day spending and require debt to fall as a share of the economy by the end of this Parliament, have been challenged by global trade tariffs, rising inflation, and increased borrowing costs.
Despite a generally weak economic performance—UK growth was just 0.1% between October and December 2024 and the economy contracted by 0.1% in January—the Chancellor remains committed to her fiscal discipline. However, with inflation currently at 3% (above the Bank of England’s 2% target) and forecast to rise further, uncertainties remain over whether interest rates will be cut further from the current 4.5%.
Key aspects of the Spring Statement will also include potential reallocations in international aid funding to defence, following the government's decision to raise defence spending to 2.5% of national income by 2027. Opposition voices, including Conservative leader Kemi Badenoch or shadow chancellor Mel Stride, are expected to challenge the Chancellor's plans, particularly regarding the potential for “hidden” tax rises via extended income tax thresholds freezes.
As the OBR prepares to publish its forecast—which may show that the £9.9bn financial buffer set aside to meet fiscal targets has been eroded—the Spring Statement promises to be a critical moment for the UK’s economic policy, setting the tone for the coming financial year amid a challenging global environment.
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