Chancellor Rachel Reeves has outlined her economic plans for the UK in the Spring Statement, addressing key areas such as defence, public services, welfare, and economic growth.
The Office for Budget Responsibility (OBR) has also released its latest forecasts, providing insights into the country’s financial outlook.
Here’s a summary of the key announcements:
Defence & overseas aid
- Defence spending will increase by an additional £2.2bn next year, on top of the previously planned £2.9bn rise.
- This will bring military expenditure to 2.36% of national income, with a goal of reaching 2.5% by 2027.
- The increase will be funded by reducing overseas aid from 0.5% to 0.3% of gross national income in 2027 and utilizing Treasury reserves.
Public services
- The government aims to cut administrative costs by 15% by 2030.
- Around 10,000 civil service jobs will be eliminated, affecting HR, policy, communications, and office management roles.
Welfare changes
- Incapacity benefits under Universal Credit (UC) will be halved for new claimants.
- Previously announced benefit cuts are now expected to save £3.4bn by 2030, down from the £5bn originally projected.
- Stricter eligibility rules for Personal Independence Payments (PIPs) will take effect from November 2026.
- Incapacity benefits for existing claimants will be frozen at £97 per week from April 2025, with additional support for those with severe conditions.
- The incapacity benefit top-up for Universal Credit will no longer be available to those under 22.
Economic forecasts
- The OBR has lowered the UK’s 2024 growth forecast from 2% to 1%.
- However, growth projections for the next four years have improved: 1.9% in 2025, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.
- Inflation is expected to average 3.2% in 2024 (up from 2.6% previously forecast), before falling to 2.1% in 2026.
- Inflation is projected to reach the government’s 2% target by 2027.
What this means for you
With economic policies shifting, businesses and individuals must stay ahead of potential tax and regulatory changes. Whether you need to review your corporate tax strategy, manage cash flow, or plan for long-term financial stability, our team is here to help.
Get in touch today to discuss how these changes might impact you or your business.
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