Spring Statement 2025

Chancellor Rachel Reeves delivered her first spring budget this week (Wednesday 26th March), and there wasn’t much positivity to be found for individuals or businesses.

In response to the economic uncertainty being felt around the world, the Office for Budget Responsibility (OBR) halved its growth predictions for the UK economy this year from 2% to 1%, while cuts to disability and out of work benefits are expected to push a further 250,000 into relative poverty by 2029/30, according to the Department for Work and Pensions.

Let’s take a closer look at the announcements from the budget and what they could mean for you.

Welfare cuts and investment in getting people into work

The government is introducing stricter rules for personal independence payments (Pips)—money provided to help with extra living costs if you have either a long-term physical or mental health condition or disability—and cuts to the health element of Universal Credit.

Labour will invest £1bn to try and get more of these people back into work, while there is also an additional £400m for the Department of Work and Pensions and job centres, with the aim of reducing the number of young people not in employment, education or training (NEETs).

However, given the reduced expectation for growth this year, will there be enough jobs for these people to move into?

Employer National Insurance contributions set to rise

Labour stuck to its pledge to not raise taxes on ‘working people’, keeping income tax and employee NIC rates the same—although freezing income tax thresholds does constitute an effective tax rise.

However, the previously announced increase to employer NICs will still come into effect from 6th April.

Impact on property market

The Chancellor made several references to Labour’s plans to build more homes during the budget statement, and the OBR estimates this will have an impact on average house prices by 2029, reducing them by 0.8%. However, in the meantime the OBR predicts house prices to rise by 2.8% in 2025 and 2.5% per year from 2026 to 2028.

The average interest rate paid by homeowners is also expected to peak in 2028 at 4.7%, and remain at that level until 2030.

Reduction in household savings

Reduced growth is expected to see the ‘household saving rate’—the percentage of disposable incomes being saved—fall from 6.25% to 3.35% by 2030, although Reeves did confirm that the government was considering changes to Isas.

How to deal with an uncertain future

In an age of geopolitical instability, you need to have confidence in the financial decisions you make.

Here at Warr & Co we provide a comprehensive range of accounting services for private individuals and businesses, including pensions and estate planning, company formations, auditing and bookkeeping. 

To find out more about how our expertise and experience can help you to make the most of your money, get in touch with our team today, or request a free consultation.