Mon, 24 Mar 2025

Mon, 24 Mar 2025 Faisal Islam: No tax rises and no return to austerity but will it last?

The Spring Statement is "not a Budget", but the chancellor is facing major tax and spending challenges.

* The Spring Statement will be a "thin book" with only minor new policies, no further tax rises, and a focus on delivering the government's forecast.
* The Treasury has reduced its room for manoeuvre due to higher borrowing costs and slower economy growth, wiping out the space for future budgetary flexibility.
* Chancellor Rachel Reeves has made adjustments to keep numbers on track, but this may require further tax measures in the autumn Budget.
* £5bn cut to welfare spending is the biggest single welfare cut for a decade, with hundreds of thousands losing health-related benefits.
* A 15% cut in civil service admin costs and staffing by 2029-30 is expected, which could lead to the loss of up to 10,000 roles.
* The Chancellor aims to restore her room for manoeuvre through measures such as automating public services and increasing defence spending.
* The Spring Statement will reveal how the OBR's downgrade in the economy forecast for 2025 affects the Budget numbers and tax revenues.
* There is uncertainty over the impact of growth-enhancing reforms, with the Treasury trying to get the OBR to give credit for planning changes.
* The government's infrastructure, industrial, and trade strategies are still awaited eight months after it took power.
* UK Government borrowing costs have risen due to market uncertainty, but a potential economic deal with the US could provide an opportunity to project a stable and connected economy.
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