It was confirmed that the Office for Budget Responsibility (OBR) has cut its short-term growth forecast from 2% to 1% for 2025, but upgraded to 1.9% in 2026, 1.8% in 2027, 1.7% in 2028 and 1.8% in 2029.

As expected, the welfare budget is to be cut. Spending will, however, increase on defence – but this is being funded from existing Treasury reserves and the already announced cuts to foreign aid.

The long-term fiscal outlook remains challenging, said the OBR, with pressures from an ageing population, and rising geopolitical tensions putting the public finances on an increasingly unsustainable path.

Whilst no new tax rises were announced, there is speculation that these will be unveiled in the next Autumn Budget.

Brief recap: key changes previously announced:

• Tax thresholds frozen until 2028, creating the highest tax burden in 70 years.
• Inheritance tax threshold frozen until 2030.
• Stamp Duty Land Tax cuts end on 31 March 2025.
• Employers’ NIC increases by 1.2% to 15% from April 2025.
• VAT on school fees from January 2025

Spring Statement: measures announced:

• Ongoing review of reforms to Individual Savings Accounts to get the balance right between cash and equities.
• £2bn investment in social and affordable housing.
• State pension triple lock – 4.1% increase in April 2025.
• Pension credit will also rise by 4.1%.
• From Summer 2025 the High-Income Child Benefit Charge (HICBC) can be paid by employed parents through PAYE, removing the need to register for Self-Assessment.

The Chancellor will be relieved that she achieved her principal objective of not spooking the markets. Investors took the speech in their stride.

As always, the EQ Investors team will continue to review the changes and their impacts over the coming days and weeks.

Please do get in touch if you have any questions or would like more information.