On 3rd March Rachel Reeves delivered her economic update in this year’s Spring Statement. In uncertain times there are few updates since November’s budget, instead the chancellor chose to report on the impact of the changes delivered in her 2025 budget – with no additional tax raising measures or changes to pensions or savings.
The Chancellor has claimed that after accounting for inflation, households are forecast to be £1000 per year better off by the next election. This measure, known as the Real Household Disposable Income (RHDI) shows an average of 3.1% growth for 2024-25. In the years to come this growth is forecast to be much lower, so whilst the average figure of £1000 looks likely to be achieved, households have already seen the majority of any potential increase in their disposable income.
With defence clearly on the government’s mind thanks to growing worldwide tensions it’s not surprising to see an increase to defence spending to 3.5% of GDP by 2035.
With 1 in 8 young people not in work, education or training the chancellor highlighted this as a key issue to be tackled. She highlighted planned for reforms to apprenticeships targeting an increase in young people entering the workforce, with more changes expected in the coming weeks.
After a high of 11.1%/yr in October 2022 inflation was forecast to hit its 2% target, but the chancellor noted that this target was now uncertain with the continuing impact of the US-Israel war with Iran.
From April 2026 those pubs and music venues who are eligible will receive a 15% reduction in their business rates. Whilst this is good news for some venues, many other hospitality businesses are still facing uncertain times thanks to rising tax bills and an increase in the minimum wage.
Following the announcement of a hugely unpopular inheritance tax on farms (which would have seen those valued at over £1 million taxed at 20%) the government had already announced a watering down of this policy. The threshold for tax will now increase to £2.5 million. Whilst this is undoubtedly a reprieve for many smaller farms – in reality there will still be many who own expensive land and machinery which will meaning they will remain impacted by a tax many will be unable to afford.
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