Spring Statement 2025: What’s Shaping the Chancellor’s Thinking?

The Chancellor will deliver her Spring Statement on 26 March 2025. While originally expected to be a brief response to new economic forecasts, recent developments at home and abroad may mean bigger decisions are on the table.

Here’s a look at the context — and what businesses should be watching out for.

Global and Economic Backdrop: Uncertainty Abounds

Since the 2024 Autumn Budget, the international landscape has shifted significantly. The Trump administration in the US has introduced new trade tariffs and softened its stance on Russia, prompting European nations — including the UK — to commit to higher defence spending.

Domestically, economic growth remains modest. Business sentiment has cooled, with upcoming tax rises and a 6.7% increase to the National Living Wage from April putting pressure on employers.

Inflation stood at 3.0% in January and is forecast to rise further in the near term. The Bank of England has begun cutting interest rates, but they remain relatively high.

Will Fiscal Rules Hold?

The government has two main fiscal rules for 2029/30:

• The current budget (day-to-day spending vs revenue) should be in surplus.
• Public sector net financial liabilities should be falling as a share of GDP.

These targets were being met by narrow margins in the last OBR forecast. But with growth weakening, borrowing higher than expected, and inflation proving sticky, the Chancellor may have to act to stay on course.

What Might Be Announced in the Statement?

Although Spring Statements are typically light on policy, pressure to stick to fiscal rules may drive action. Possible measures include:

• Departmental spending cuts or lower growth in budgets from 2026 onwards
• Welfare reforms, including proposed changes to disability benefits aimed at reducing long-term economic inactivity
• Tax policy tweaks, such as extending current freezes to tax thresholds, which increase revenue through ‘fiscal drag’

The Chancellor has committed not to raise income tax, National Insurance or VAT — but smaller levers may still be pulled.

What Else Changes in April?

Several measures already announced will come into force with the new financial year:

• Employer NICs increase from 13.8% to 15%
• NICs threshold lowered, meaning more salaries will attract employer contributions
• National Living Wage rises to £12.21 per hour for workers aged 21+
• Frozen income tax thresholds remain in place
• State Pensions rise by 4.1% under the triple lock
• Business rates relief for retail, hospitality and leisure continues, but at a reduced level

What Happens Next?

Following the Statement, the OBR will publish its updated economic forecasts. Phase 2 of the Spending Review will conclude in June, with departments expected to identify 5% savings against current budgets.

The next Budget is expected in autumn 2025.

HURST’s View

While no major tax changes are guaranteed in March, the environment remains one of fiscal discipline. Businesses should prepare for sustained cost pressures, moderate growth, and limited fiscal flexibility.

We’ll publish a full summary and analysis after the Statement. In the meantime, if you’d like to discuss how this affects your business or personal finances, please get in touch.

Join Us for Our Spring Statement Event

We're hosting a dedicated event to unpack the Spring Statement and what it means for you. Join our experts as we break down the key announcements and share practical insights for business leaders and individuals alike.

Register here: Spring Statement 2025 Event