Chancellor of the UK Government, Rachel Reeves, presented her Spring Statement to Parliament today.
The Office for Budget Responsibility has downgraded the UK’s economy growth forecast to 1.0% in 2025, which is lower than the 2.0% predicted in October. But growth is then forecast to accelerate to 1.9% in 2026 and every year thereafter. Cumulative growth across the forecast period (Q4 2024 – Q1 2030) is now expected to be 9.4%, compared to 9.2% in the OBR’s October forecast.
Reeves also said that the government is driving ambitious reforms to create a more pro-work welfare system for those who can work, and to protect those who cannot. These reforms put welfare spending on a more sustainable trajectory, with the OBR confirming that they will save £4.8 billion from the welfare budget in 2029-30 and that welfare spending will fall as a share of GDP in the medium term.
Reeves also committed to increase NATO-qualifying defence spending to 2.5% of Gross Domestic Product (GDP) by 2027, including by providing an additional £2.2 billion of funding for the Ministry of Defence (MOD) next year.
The OBR says that the planning reforms included in the government’s National Planning and Policy Framework (NPPF) will lead to 170,000 additional homes built over the forecast period. This increases the level of real GDP by 0.2% by 2029-30, adding £6.8 billion to the economy, and by over 0.4% in 2034-35.
Kevin Fitzgerald, UK MD, Employment Hero, an payroll and employment platform, said: “The government had an opportunity to support the small businesses that are the backbone of our economy, but today’s Spring Statement missed the mark.
“Our real-time employment data shows employment shrinking by 0.4% in February, with overall employment trending downwards since October, when the Chancellor announced an increase in employer National Insurance Contributions. This change alone will cost businesses £900 more annually per employee on a median wage.
“Instead of addressing these challenges, the government is pushing policies that make it harder for SMEs to grow and hire. While we understand the fiscal challenges and see the case for benefit reform, the government hasn’t yet put these changes together in a way that works for businesses.
“Providing targeted support to SMEs that hire people coming off long-term benefits would benefit both businesses and the economy. Without meaningful intervention, we risk further job losses, particularly among our youth where NEET numbers already approach 1 million.”
Managing Director of Aurora Capital, George Holmes, said: “The Spring Statement delivered few surprises, but for small businesses, that’s part of the problem. With no new tax or spending support announced, and inflation now down to 2.8%, many SMEs will feel this was a missed opportunity to help them weather the cost pressures they’re still facing.
“Employment costs are set to rise significantly in April, with higher National Insurance contributions and the increase to the National Living Wage kicking in. Yet, despite clear warnings from business groups, there was no new support to ease the pressure on small employers; no targeted reliefs, no funding boosts and no signal of short-term help with borrowing costs.
“If the government is serious about making the UK the best place to start and scale a business, it needs to do more than talk about long-term stability. Small businesses are ready to drive growth, but they can’t do it on their own.”
Iain Banks, CEO at Ventrica, said: “Today’s Spring Budget and the OBR’s downgraded economic growth forecast will prompt consumers to tighten their purse strings. It’s set to be a challenging economic environment for retailers who will want to protect their bottom line.
“Often, the first area retailers look to cut costs is their customer service teams and frontline staff. With the hype around AI and automation, many businesses will see technology as a way to drive efficiencies. However, it’s crucial to strike the right balance, streamlining operations without sacrificing the bespoke, human-centric service that builds loyalty and drives repeat business.
“Our research shows that 76% of consumers say their best customer service experiences come from human interactions. If businesses want consumers to keep spending, they can’t afford to lose that personal touch. In fact, following a positive experience, more than half of consumers would make a repeat purchase with the brand. Instead of seeing customer services as a cost-centre that requires streamlining, brands should transform their customer experiences into revenue generators for the business. Providing emotive experiences that can generate long-term loyalty and revenue during a period of declining consumer spending.”
Jon Healy, COO at Keysource, said: “Against a backdrop of US tariffs and global competition in emerging technologies, the Chancellor’s Spring Budget arrives at a critical juncture for Britain’s growth agenda.
“With a renewed focus on defence and economic resilience, the government’s commitment to strengthening the UK’s security and boosting productivity is clear. However, if the UK is to realise its ambition of becoming a defence industrial superpower and bringing innovative tech to the frontline, it must recognise that data centres are now as critical to national security as they are to economic growth.
“As data increasingly becomes a national asset, protecting the infrastructure that powers it is paramount. Data centres underpin everything from AI-driven defence systems to financial services and essential public operations and must be defended with the same urgency as other vital infrastructure. Yet, while the Budget’s pledge to tear down regulatory barriers across sectors was encouraging, it fell short of addressing the practical measures needed to protect and expand the UK’s data infrastructure. Without streamlined planning policies, improved grid capacity and stronger safeguards, the country risks falling behind in the global race for technological and economic resilience.
“If AI and emerging technologies are to drive the UK’s defence and economic growth ambitions, the government must adopt a broader, more strategic approach that treats data centres not just as enablers of innovation, but as pillars of national security.”
