Chancellor Rachel Reeves has unveiled her latest economic plans in the Spring Statement, outlining key measures impacting defence, public services, welfare, and economic growth.
Alongside this, the Office for Budget Responsibility (OBR) has released updated forecasts, offering insights into the UK’s financial outlook. Here are the key announcements:
Defence & overseas aid
- Defence spending will increase by an additional £2.2bn next year, on top of the previously planned £2.9bn rise.
- This will bring military expenditure to 2.36% of national income, with a goal of reaching 2.5% by 2027.
- The increase will be funded by reducing overseas aid from 0.5% to 0.3% of gross national income in 2027 and utilizing Treasury reserves.
Public services
- The government aims to cut administrative costs by 15% by 2030.
- Around 10,000 civil service jobs will be eliminated, affecting HR, policy, communications, and office management roles.
Welfare changes
- Incapacity benefits under Universal Credit (UC) will be halved for new claimants.
- Previously announced benefit cuts are now expected to save £3.4bn by 2030, down from the £5bn originally projected.
- Stricter eligibility rules for Personal Independence Payments (PIPs) will take effect from November 2026.
- Incapacity benefits for existing claimants will be frozen at £97 per week from April 2025, with additional support for those with severe conditions.
- The incapacity benefit top-up for Universal Credit will no longer be available to those under 22.
Economic forecasts
- The OBR has lowered the UK’s 2024 growth forecast from 2% to 1%.
- However, growth projections for the next four years have improved: 1.9% in 2025, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.
- Inflation is expected to average 3.2% in 2024 (up from 2.6% previously forecast), before falling to 2.1% in 2026.
- Inflation is projected to reach the government’s 2% target by 2027.
How this affects your financial planning
With ongoing economic shifts, individuals and businesses need to reassess their financial strategies. Whether you’re looking to safeguard your investments, review your tax planning, or ensure long-term financial security, our expert team is here to guide you.
Get in touch today to explore how these changes may impact your financial future.
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