Spring Statement 2025 – An underwhelming Statement and a stark update on the UK’s finances

But the Chancellor, Rachel Reeves, stuck to her promise of a single fiscal event per year. The Spring Statement was just that – a fairly stark update on the country’s finances which sees growth in 2025 halved and paper-thin margins on the self-imposed fiscal rules.

But it could have been so much better.

It was never going to happen but imagine the reaction if the Chancellor had cancelled next week’s employer’s National Insurance increase. Reeves was purposely silent on National Insurance, farmers and non-doms – and not to mention the continued freeze on personal tax allowances and thresholds. The tax burden is the highest in 70 years at 37.7% of GDP. There needs to be acknowledgement that a tax burden on individuals and businesses is an anchor on the economy – and changing the reporting rules for side-hustles is not going to fix that.

The Labour Government was keen to remind the country that the economy remains fragile because of the aftereffects of Liz Truss’ ill-fated Mini Budget in 2022 – that was 2 ½ years ago and, arguably, the more recent Autumn Budget (and the wild speculation before it) did more sustained damage to the UK economy. Jeremy Hunt actually reversed most of the Mini Budget measures – the same cannot be said for last year’s Autumn Budget and the Government refuses to alter its very entrenched position on NIC, Inheritance Tax on farms, family businesses and pensions, and non-doms.

The only tax announcement of note was yet more money for HMRC – £300 million this time, in addition to the £1.4 billion that has been pledged over the last three years. The latest injection of cash into HMRC is promising to deliver £1 billion over the next five years – a stronger stance on aggressive tax avoidance, higher penalties and more debt collectors will help to close the £40 billion tax gap. Nothing new here and I would have liked to have seen more money for HMRC officers to answer the phones.

We now look forward to the only fiscal event of 2025 – the Autumn Budget, but I think the difficult economic outlook suggests the Chancellor comes back with yet more tax increases. That could mean talk of higher Capital Gains Tax, maybe even a wealth tax and/or exit tax. In reality, the Government needs to make bolder choices and cancel the pensions triple lock and look at increasing Income Tax, National Insurance and VAT.

Realistically, there will be few other choices sadly.

Would you like to know more?

If you have any questions about the Spring Statement or how it may impact you, please get in touch with your usual Blick Rothenberg contact or Nimesh using the form below.