In December 2024, Chancellor of the Exchequer Rachel Reeves announced the date when her next formal report to Parliament would be due, following the Autumn 2024 Budget.
Several Chancellors ago in 2016, then-Chancellor Philip Hammond decided to replace two Budgets a year with one Autumn Budget and a Spring Statement, the former of which would be the main fiscal event, with the latter no longer introducing significant tax changes.
Rachel Reeves is set to follow this structure again – and after the disastrous 2022 mini-budget, when Chancellor Kwasi Kwarteng failed to consult the Office for Budget Responsibility (OBR), the OBR is still being commissioned to produce two reports a year.
Therefore, Chancellor Reeves will present a Spring Statement to Parliament based on the OBR’s latest economic and fiscal analysis, which will be published on the same day.
With the aim of giving businesses and families more certainty and stability, the Spring Forecast shouldn’t announce any significant spending changes – but with low economic growth in the UK, the pressure is on for the Labour government to produce feasible long-term plans.
When is the Spring Forecast?
The Spring Forecast is due to be published by the OBR on Wednesday 26th March, after which Reeves will deliver a statement in Parliament regarding the national financial outlook.
As businesses and households across the UK are still digesting the implications of the Autumn Budget, which announced billions of pounds’ worth of tax hikes and spending policies, most will be hoping that the Spring Forecast won’t introduce more drastic changes.
While the Treasury has previously stated that the Chancellor is committed to ‘one major fiscal event’ each year, with no significant policy announcements due until the next Autumn Budget, it’s possible the government will change its mind under the pressure to stimulate growth.
With reports that high borrowing costs and little economic growth has wiped out any ‘fiscal headroom’ the government may have had, speculation is increasing about a downgraded forecast.
Though the Chancellor wouldn’t have wanted to rock the boat, high inflation and the poor economic growth forecast already hinted by the Bank of England could force the government’s hand.
Will the Chancellor raise taxes?
Though the Spring Statement is not scheduled to include the fiscal announcements of a Budget, the OBR forecast will set the scene for the nation’s finances and pave the way for more difficult tax-and-spend decisions down the line at the next Autumn Budget, due around October 2025.
After government borrowing costs increased in January this year, rumours began to appear that either targeted tax rises or spending cuts will be necessary to balance the books.
The government already pledged not to increase Income Tax, VAT, or employee National Insurance Contributions – which accounted for more than half of tax receipts in 2023–2024 – so going back on this promise would be an extremely unpopular move.
This would leave public spending cuts as the only remaining choice, but this would also be very difficult, as departmental spending is already stretched thin and the Chancellor also pledged not to return to the austerity policies introduced after the global financial crisis.
Raising taxes to fund public spending would then need to happen, but the Chancellor would have to look at other areas such as extending the tax threshold freeze – despite another pledge to end it – or perhaps extending the survival period for Inheritance Tax on financial gifts.
Alternatively, the government could reduce Corporation Tax and the additional rate for Income Tax to stimulate the entrepreneurial sector, but there isn’t much room for tax cuts.
It all depends on whether the government is willing to break previous pledges, and if so, which ones.
Consult accountants for tax advice
Most speculators anticipate a Spring Statement that doubles down on last October’s Budget without substantial changes, though the Chancellor must explain what meaningful action the government plans to take to address the urgent issues caused by a stalling economy.
The absence of further major tax changes will be good news for those currently planning for 2025 and adjusting to the latest changes for the 2026 tax year and beyond.
With the new tax year approaching in April, now is the best time to start professional tax planning if you haven’t already. Here at gbac, we offer a wide selection of financial services, so you can speak to our accountants in Barnsley for tax-efficient financial advice.
Simply call our office on 01226 298 298 or email us at info@gbac.co.uk for more information.