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The Spring Statement 2025

27 March 2025

The Spring Statement revealed few surprises, with several economic challenges weighing on the Chancellor’s forecast. The second half of last year saw weaker momentum, compounded by higher borrowing costs as global risk premia increased, reflecting a deteriorating external environment. Notably, the Office for Budget Responsibility halved its forecast for economic growth this year from 2% to 1% and lowered the forecast path for the level of productivity.

In light of slower-than-expected economic growth, rising government borrowing costs, and limited fiscal flexibility, the Chancellor confirmed a series of tougher measures. These include welfare spending cuts, increased defence expenditure, and a renewed focus on tackling tax avoidance and enhancing financial reporting.

Key highlights include:

  • Growth is projected at 1% in 2025, 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.
  • Stricter measures on tax evasion are expected to boost tax revenues by £1 billion annually.
  • Penalties for late payments under Making Tax Digital will rise starting in April 2025.
  • Defence spending will increase by £2.2 billion this year, moving closer to the 2.5% of GDP target.
  • A £400 million ‘defence innovation fund’ will be established, providing significant opportunities for technology and manufacturing sectors.
  • Additional funding for affordable housing will be allocated, along with training support for bricklayers and carpenters.