Chancellor Rachel Reeves delivered her Spring Statement today, providing an economic update that included downgraded growth forecasts and measures to tackle tax evasion.
The statement, not a formal budget, reflects the government’s policy of presenting only one annual budget while offering interim fiscal updates.
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Reeves told MPs that “the world has changed” since her first budget last October, attributing the economic revisions to shifting global conditions. The Office for Budget Responsibility (OBR) has halved the UK’s 2025 growth forecast from 2% to 1%, a downgrade Reeves said she was “not satisfied” with. However, she noted that economic output is still projected to grow by 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.
Despite short-term challenges, Reeves announced that the government budget will transition from a deficit of £36.1bn in 2025-26 to a surplus of £9.9bn by 2029-30. She reiterated that the statement contained no new tax increases but underscored plans to combat tax evasion, including a pledge to increase tax fraud prosecutions by 20% annually, aiming to generate an additional £1bn in revenue.
Business and finance community reaction
The business community responded with concern over the economic outlook and the lack of immediate support measures for small enterprises.
Tina McKenzie, Policy Chair of the Federation of Small Businesses (FSB), said the forecasted slowdown underscored the urgency of stimulating economic activity. She urged the government to implement “credible, pro-small business plans” and called for reductions in business taxes. McKenzie welcomed the Chancellor’s commitment to maintaining tax stability but criticised the government for not going further in easing financial pressures, particularly around business rates and employment costs.
“FSB’s latest quarterly Small Business Index revealed confidence levels among small businesses at their lowest since the first year of the pandemic. That needs to be turned around, and fast,” McKenzie said.
McKenzie also raised concerns about rising employer National Insurance contributions (NICs), noting that while the Employment Allowance increase would offer some relief, many businesses would still face a higher overall tax burden.
Theo Chatha, CFO at Bibby Financial Services, expressed disappointment in the lack of targeted measures for small and medium-sized enterprises (SMEs), highlighting that 87% of SME leaders were eager to invest but had delayed major decisions in anticipation of today’s announcement.
“Will SMEs feel more confident after today’s announcements? Likely not,” Chatha said, warning that continued uncertainty could cause businesses to postpone investments in technology, machinery, and hiring, contributing to economic stagnation.
He described the statement as a “missed opportunity” to address business concerns, particularly in the wake of an unpopular Autumn Budget and upcoming increases in employer NICs and business rates.
