On Wednesday 26^th March 2025, Chancellor Rachel Reeves updated Parliament on the nation’s finances in her first Spring forecast, providing an update on the economy, public finances and progress against the Government’s economic objectives since the last budget update in October.  

The statement focused largely on how the Government is outlining its plans around defence, reform and economic growth by:  

• Providing an additional £2.2 billion of funding for the Ministry of Defence (MOD).  

• Ensuring public services are ‘productive and agile’ and targeting welfare spending towards those that need it the most, and that the tax that is owed is paid.  

• Supporting growth by investing £13bn in capital infrastructure over the next five years.

• Launching a construction package to train up to 60,000 more skilled workers.  

• Investing an additional £2bn in social and affordable housing.  

What can businesses expect?

Whilst we weren’t expecting a very eventful Spring forecast after the Treasury stated it would only produce one ‘fiscal update’ per year in the autumn, there were a couple of announcements that may affect UK businesses.

Interest Rates

As we saw in the latest announcement by the Bank of England on the 20th of March, a decision was made to maintain the interest rate at 4.5%. It was suggested in the budget however that the OBR forecast inflation to reduce to 3.2% this year, 2.1% in 2026 and 2% from 2027 onwards.  

Tax and National Insurance

It was announced in the Autumn budget at the end of 2024 that employers would be hit with an increase in employers’ NICs which could influence hiring decisions. In Rachel Reeves’ latest announcement, there was no mention of any expected rises to income tax, national insurance or VAT.  

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