UK Chancellor Rachel Reeves presented the Spring Budget 2025, emphasizing fiscal discipline amidst global economic uncertainty impacting Britain’s public finances and growth. The Office for Budget Responsibility (OBR) has revised down the UK’s 2025 growth forecast to 1%, but predicts a rebound to 1.9% in 2026 and stabilization around 1.7-1.8% by 2029. Inflation is expected to reach the Bank of England’s 2% target by 2027.

No new taxes, focus on tax evasion

Reeves confirmed no new tax increases, instead focusing on tackling tax evasion. By deploying advanced technology, investing in HMRC’s capabilities, and increasing prosecutions for tax fraud by 20%, the government aims to generate an additional £1 billion in revenue, contributing to a total of £7.5 billion raised under the Labour government.

Spending priorities

The budget prioritizes capital investment with an additional £2 billion annually to boost economic growth. Defence spending will rise to 2.5% of GDP, focusing on new technologies like AI and drones, with a new Defence Growth Board to maximize economic benefits. Welfare reforms will save £4.8 billion, with cuts to universal credit and personal independence payments, but £1 billion will be allocated for employment support and £400 million for job centres. Public sector reforms include a £3.25 billion Transformation Fund to modernize services and reduce costs, with civil service costs cut by 15%, saving £2 billion by 2030.

Homebuilding and growth

Planning reforms are expected to boost housebuilding to 305,000 homes annually by the end of the forecast period, with 1.3 million new homes over the next five years. These changes are projected to add £6.8 billion to the economy by 2029-30 and up to £15.1 billion by 2030.