Key Takeaways from the Spring Statement
Everything You Need to Know as the OBR Cuts UK Growth Forecast and Government Spending is Reduced
The latest Spring Statement has outlined significant changes to the UK’s economic outlook, with the Office for Budget Responsibility (OBR) halving its growth forecast and the Chancellor announcing major spending cuts.
The statement, viewed as a budget in all but name, comes amid global economic uncertainty. The government has emphasised the need for an active approach to managing financial pressures while making adjustments to taxation, welfare, and infrastructure spending. In turbulent time, whether you are looking to find a financial adviser to help with pension planning, protection services, or general investment strategies, speaking to a professional can help secure your financial future.
Key Announcements from the Chancellor:
- Economic growth forecast halved
- Record tax burden remains
- Budget deficit avoided
- Welfare cuts of £4.8bn
- Whitehall spending reductions
- Increased defence investment
- Planning reforms to boost development
Economic Growth Forecast Halved
The OBR has significantly lowered its growth forecast for 2025, now predicting just 1% growth. This presents a challenge for the government’s commitment to expanding the economy.
Despite this, measures including infrastructure investment, pension reforms, and planning system changes are expected to support long-term growth. The OBR has upgraded forecasts for subsequent years, suggesting a potential recovery.
Record Tax Burden
No new tax increases were announced, but the OBR warned that Britain’s tax burden will reach a record high in the coming years. Tax as a share of GDP is projected to reach 37.7% by 2027-28. Previously announced tax measures, including a National Insurance increase and a freeze on income tax thresholds, will take effect next month.
Budget Deficit Avoided
While previous forecasts predicted a budget deficit of £4.1bn by 2029-30, the Chancellor stated that new measures will result in a surplus of £9.9bn.
Welfare Cuts of £4.8bn
The government confirmed a reduction in welfare spending, expected to save £4.8bn annually. Changes include adjustments to disability benefits and Universal Credit, with a 50% reduction in the health element for new claimants.
The Chancellor stated: “We believe that if you can work, you should work, and if you cannot, you should be properly supported.”
Whitehall Spending Reductions
A drive for efficiency will see government running costs reduced by 15%, saving £2bn by the end of the decade. Additionally, a £3.25bn transformation fund will support AI-driven efficiencies, new IT systems, and civil service restructuring. Overall, the government aims to cut £6.1bn in operational spending by 2029-30.
Increased Defence Investment
Defence spending is set to increase, with an initial investment of £2.2bn next year. A minimum of 10% of the defence budget will be allocated to emerging technologies, including drones and AI. The government also pledged £400m to accelerate defence innovation.
Planning Reforms to Boost Development
The government reaffirmed its commitment to large-scale housebuilding and economic development through planning reforms. New measures will ease restrictions on Green Belt development and reinstate mandatory housing targets for local councils.
These changes are expected to boost GDP by 0.2% annually by the end of the decade, rising to 0.4% within ten years.
What This Means for Financial Planning
For individuals seeking financial stability in light of these economic changes, working with a financial adviser can provide clarity. Whether you need guidance on pension planning, investment strategies, or protection services, finding an independent adviser or a certified adviser is crucial in navigating economic uncertainty.
If you are looking for the best financial adviser near me, it’s important to compare fees and services to ensure you receive tailored advice. Now is a great time to book a meeting with an adviser to discuss how these economic changes might impact your financial future.
Next Steps
If you want to ensure your financial plans align with these economic shifts, consider seeking expert advice. Whether you are looking to find a financial adviser to help with pension planning, protection services, or general investment strategies, speaking to a professional can help secure your financial future.
Book a meeting with an adviser today to discuss your options.
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