What is likely to be in the spring statement by Rachel Reeves

24th March 2025

Chancellor Rachel Reeves is expected to deliver her Spring Statement on Wednesday, March 26, 2025. Here's what might be included:

Spending Cuts: Reeves has hinted at significant spending cuts, including a reduction of 15% in civil service running costs by 2029-30, which could lead to around 10,000 job losses2.

Welfare Adjustments: A £5 billion cut in welfare payments has been announced, sparking criticism from various quarters.

Tax Policies: While Reeves has ruled out further tax increases, there is speculation about extending the freeze on income tax thresholds beyond 2028, which could act as a "stealth tax". The so called fiscal drag looks likely to squeeze taxpayers more and more in the next two years.

Business Rates: There might be changes to the business rates system, potentially increasing relief for struggling sectors like retail and hospitality.

Economic Outlook: The statement is expected to provide an update on the UK's economic health, with growth forecasts revised downwards.

The statement is shaping up to be a critical moment for the UK economy.

Spending cuts can have significant impacts on public services, even if they are targeted at administrative budgets rather than frontline services. Here are some potential effects:

Reduced Efficiency: Cuts to administrative roles, such as HR and policy advice, might initially seem to spare frontline services. However, these roles are crucial for the smooth functioning of public services, and their reduction could lead to inefficiencies2.

Strain on Frontline Services: Despite assurances, unions warn that cuts often indirectly affect frontline services. For example, delays in processing tax payments or court cases could worsen due to reduced staffing3.

Increased Workload: Remaining staff may face increased workloads, leading to burnout and reduced morale, which can further impact service quality.

Public Dissatisfaction: Longer waiting times, reduced access to services, and lower quality of service could lead to public dissatisfaction and erode trust in government3.

Economic Ripple Effects: Cuts to welfare or other support services can have broader economic impacts, potentially increasing inequality and reducing consumer spending4.

While the intention behind such cuts might be to improve efficiency or reduce deficits, the actual outcomes often depend on how well the changes are managed and whether alternative solutions are implemented to mitigate negative effects.