Spring Statement 2025: Businesses cautious on growth, expect further tax hikes
Rachel Reeves may have ended her Spring Statement upbeat on long-term prospects after an upgrade from the Office of Budget Responsibility, but businesses don’t seem to be buying it.
The Chancellor announced that the OBR had upgraded growth forecasts for the coming years, as she brushed aside the 2025 outlook which was slashed in half.
Reeves said she was “not happy” about the revised figures, but touted the OBR’s forecasts that growth would hit 1.9% in 2026, 1.8% in 2027, 1.7% in 2028, and 1.8% in 2029.
Karim Fatehi, chief executive of the London Chamber of Commerce said: “We welcome today’s statement from the Chancellor but remain cautious about the government’s broader ambitions for economic growth and need to see more support for the great British businesses that create jobs.”
Fatehi said businesses across the City were grappling with challenging conditions triggered by the Autumn Budget, as well as geopolitical instability.
Firms are already turning to the next budget and beginning to brace for any blows they will be dealt as the Chancellor maintains her “non negotiable” fiscal rules.
Market analyst at Hargreaves Lansdown Sarah Coles said: “The debate has already started on whether there might be a new kind of tax altogether to boost the take without breaking any promises.”
Jefferies economist Modupe Adegbembo said: “The key takeaway is that the macro forecasts are still built on an overly optimistic view of growth, which makes it likely the government will need to deliver further cuts or tax increases later down the line to keep finances on track.”
Businesses will feel the full brunt of Autumn’s Budget as Reeves’ hike to employer’s national insurance contributions officially kicks in.
The Chancellor raised NIC 1.2 per cent, whilst simultaneously upping the minimum wage across all age rates and giving a radical overhaul to worker’s rights.
Managing director of Evelyn Partners Jason Hollands said: “Ahead of today’s statement, the Chancellor had sought to quell speculation of further tax rises, which we have previously argued were very unlikely given the mood music, and when most of her previous measures have yet to come into force.
“But the absence of further tax measures today should provide only limited comfort as the tax burden is only going to ratchet up from here”.