Spring Statement and Economic Outlook 2025

The Spring Statement and latest OBR “Economic and Fiscal Outlook” landed last week and, as expected, the outlook is a challenging one. These are our key takeaways and insights on how the new tax changes may affect you.

• Real GDP growth forecast at 1% for 2025 (half of the rate last forecast at Autumn Budget)

• Deterioration of fiscal outlook due to lower than expected tax receipts and higher debt interest

• Uncertain global economic conditions

In the round, the year is set to be challenging from an economic viewpoint. The changes coming in with Employers National Insurance and the National Minimum Wage will undoubtedly impact businesses, leading to a mix of outcomes such as raising prices, considering staffing costs and recruitment plans, and efficiency savings. And this will have a knock on effect for profit and, ultimately, tax which will feed back into the picture for the Autumn Budget later this year.

Our current view is that inflation will be touch and go over the next few months (April will see some rise naturally) and with the new tariffs imposed by the US, it will be a rocky period. The next important aspect will be to see bank base rate decisions in the coming months.

All in all an uncertain economic landscape.

The key for businesses will be to keep on top of the numbers.

Alongside the economic picture, the Spring Statement 2025 introduced several tax changes (some already known but brought into effect this month):

• Employer's National Insurance: The rate will increase to 15% from April 2025, with the threshold dropping to £5,000

• Making Tax Digital: This initiative will expand to include landlords and sole traders with incomes over £20,000 by 2028

• Personal Tax Allowances and Bands: These will remain frozen for another year

• Double Cab Pick-Ups: New tax rules will apply to these vehicles from April 2025

• VAT Late Payment Penalties: Stricter penalties will be enforced