Ahead of the Spring Statement, the Labour Party signalled new policies aimed at addressing ongoing economic challenges and managing the public finances. There has been significant public debate surrounding the feasibility and impact of these proposed measures.
Chancellor Rachel Reeves has now (26th March 2025) set out the government’s strategy, outlining how they intend to raise and allocate funds required to stabilise and enhance the UK’s economic future.
On balance, many of the anticipated fiscal changes did not materialise. Nevertheless, aspects of the Spring Statement will affect a wide range of individuals—from retirees to entrepreneurs, business owners, and those aspiring to own property.
At Baggette + Co Wealth Management, we recognise that the details and potential implications of such announcements can cause uncertainty. Beyond the headlines, we’re likely to see extensive analysis and debate on how these measures might impact individuals and businesses.
Our experienced independent financial adviser teams have begun evaluating these changes, and we’ll continue providing insight as further details emerge.
While the following is not an exhaustive summary, it covers the key announcements from the Spring Statement 2025 and offers our perspective on their potential implications for your financial planning.
Economic Forecasts Revised
The Office for Budget Responsibility (OBR) has downgraded its UK economic growth prediction for 2025 from 2% to 1%, reflecting cautious optimism amid global uncertainties. However, growth forecasts for subsequent years are more positive, with projections of 1.9% in 2026, 1.8% in 2027 and 2029, and 1.7% in 2028.
Inflation, currently projected to average 3.2% this year—higher than previously anticipated—is expected to return closer to the government’s target of 2% by 2027. This shift in inflation forecasts underscores the importance of proactive financial planning to preserve your purchasing power and long-term financial goals.
Welfare and Benefits Changes
Significant reforms to welfare benefits aim to reduce public spending and encourage greater workforce participation.
Key changes include:
- Universal Credit: The health-related component of Universal Credit will be halved and frozen for new claimants, expected to deliver savings of approximately £3.4 billion. Additionally, those under 22 will no longer receive the incapacity benefit top-up.
- Personal Independence Payments (PIP): Stricter eligibility criteria and frozen payments until 2030, as part of broader savings measures.
- Support Initiatives: An investment of £1 billion is allocated to support disabled and long-term sick individuals in returning to employment, bolstered by an additional £400 million for the Department for Work and Pensions.
These measures reflect a shift toward encouraging employment and self-sufficiency, highlighting the increasing importance of private planning for health and income protection.
Defence and Public Spending
Amidst evolving geopolitical tensions, defence spending sees notable increases, including an additional £2.2 billion earmarked for military investment, raising total military expenditure to 2.36% of national income next year. The Chancellor emphasises a longer-term goal of reaching 2.5% of GDP by 2027, reflecting strategic defence priorities.
These increases will be partially funded by a reduction in the overseas aid budget to 0.3% of national income and administrative efficiency measures, including cutting up to 50,000 civil service positions. The government also targets a 15% reduction in administrative departmental costs by 2030.
Planning Reforms and Housing Development
Revised planning regulations aim to stimulate the economy and address housing shortages, anticipating the construction of 1.3 million new homes within the next five years.
These reforms are expected to contribute significantly—approximately £6.8 billion—to economic activity.
A Word from Our CEO
Oscar Hjalmas, Chartered Independent Financial Adviser and CEO of Baggette + Co. Wealth Management, commented:
“The Spring Statement 2025 has introduced targeted measures, notably the increase in defence spending, which has garnered broad approval. However, the announcement primarily centred around adjustments to existing policies, with relatively few substantial new initiatives. At Baggette + Co, we always take a proactive and commercial approach, carefully considering the unique circumstances of each client. As a result, we have not adjusted our advice to clients, maintaining our consistent and careful approach to financial planning.”
Talk to Our Independent Financial Advisers in Dorset
Our experienced Independent Financial Advisers (IFAs) in Dorset and Hampshire are here to shed light on the Spring Statement changes and help you navigate their potential impact on your financial well-being.
If you have any concerns following the announcement and how this may affect your financial situation, we strongly recommend contacting an experienced and independent financial adviser.
Our independent financial advisers are ready to assist you with expert financial planning advice and strategies tailored to your specific needs.
Contact Oscar Hjalmas, our CEO and Independent Financial Adviser, on 01202 676983 or email advice@baggette.co.uk to arrange a consultation.
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Baggette + Co Wealth Management is authorised and regulated by the Financial Conduct Authority. The Financial Conduct Authority does not regulate estate planning or tax advice. The above information is correct to the best of our understanding as at the date of publication. Nothing within this content is intended as, or can be relied upon, as financial advice. Capital is at risk. You may get back less than you invested. Tax rules may change, and the value of tax reliefs depends on your individual circumstances.