Spring Statement 2025: Anaemic growth forecast keeps the giant asleep for now

Rachel Reeves had already promised no huge surprises ahead of the Spring Forecast, and indeed that is what happened in her second fiscal statement as Chancellor. If anything, however, the figures presented in the forecast have only managed to heighten a sense of further austerity to come.

After all, the Office for Budget Responsibility (OBR) trimmed the short-term growth forecast from 2% to 1%, and data from the same source suggests that real GDP per person is still below levels from 2022 and not estimated to recover until 2026.

On top of this, inflation is predicted to remain above the Bank of England’s 2% target only by 2027.

What changes for financial advisers after the announcement?

Nothing. The news after Rachel Reeves’s speech was that there was no news. No fresh tax changes that could affect those saving for retirement this time round.

It’s worth noting that, even though the Chancellor didn’t touch on Individual Savings Accounts (ISAs) in her speech, the government is looking at reform options that “get the balance right between cash and equities to earn better returns for savers”. This means we could see a change of ISA rules down the line.

How should advisers act in this backdrop?

No changes doesn’t mean no action. Clients still have time to benefit from their ISA and pension allowances before the end of the 2024-25 tax yar, ahead of possible restrictions to annual or lifetime allowances in the Autumn.

It’s also worth considering that interest rates and Gilt yields are above target levels, and therefore for some clients it could make sense to consider taking up annuities to cover longer-term income needs. Given the reform being made to pensions to include them in an individual’s estate for inheritance tax calculations from 2027, making use of a steady income through annuities might be an attractive option.

Positioning clients for the retirement of their dreams

With little wiggle room in the economy, Reeves has raised concerns of more austere tax impositions for the UK in years to come.

The picture looked better back in October, when the Reeves announced her first Budget. Since then, we’ve seen slower-than-projected growth and higher-projected interest rates. This suggests we could be bracing for another round of belt tightening on the tax front in the forthcoming Autumn Budget.

Clients will turn to financial advisers for guidance and reassurance that they can still reach their financial goals, and 7IM will stand alongside advisers to make sure it supports them by offering the most suitable products and services, and by improving their workflows so they can focus on what really matters: the meaningful conversations.

Talk to us to see how we can help you navigate the uncertainty to deliver the best outcomes for your clients.

Recap of key changes previously announced

Tax threshold frozen until 2028

Inheritance tax threshold frozen until 2030

Business Asset Disposal Relief rates increase to 14% from April

20% VAT on school fees from January

New Spring Statement 2025 key measures

ISAs continue under review

Tax debt collection – additional funding

Increase in late payment penalties

Rise in Home Office fees