It’s worth pointing out that Chancellor Rachel Reeves’ 2025 Spring Statement isn’t a full budget.
With Labour committed to just one major fiscal event per year, this statement serves more as an update on the economy’s health and a review of progress since the October Budget, which introduced some major policy shifts.
While smaller in scope compared to the October announcements, these updates can still affect your investment strategy. Below, we highlight the key takeaways from this statement, along with important reminders from the October 2024 Budget.
The state of the UK economy
Spring Statement 2025 update: As expected, the Chancellor addressed the UK’s economic performance, while also stressing the need to adapt to a changing world.
Against this backdrop, and with the government committed to reducing national debt, further cuts were deemed necessary, particularly in light of reduced growth forecasts and no additional borrowing allocated for day-to-day spending.
And while no new tax increases were announced, the increase in defence spending has been accompanied by cuts to welfare.
In the immediate aftermath, market reaction was relatively muted. Sterling was down as the Office for Budget Responsibility projected GDP growth of just 1%, down from the forecast of 2% made in October 2024. UK inflation fell to 2.8% in February, and with the Chancellor insisting that the 2% inflation target will be met by 2027, this could pave the way for a lower interest rate environment in the future.
UK investment opportunities could also arise from the Spring Statement, with the Chancellor highlighting support for sectors such as defence, housing and transport infrastructure.
ISAs
Spring Statement 2025 update: Despite much talk beforehand about potential changes to the ISA system, no new announcements were made regarding ISAs in the Spring Statement – but the government is, however, looking at options for reform in the future.
October 2024 Budget: ISA limits remain frozen until 2030. While in the only change to the ISA system, Chancellor Rachel Reeves scrapped the British ISA before it could take off.
Actions to consider: With a £20,000 annual contribution limit, ISAs offer a straightforward and tax-efficient way for investors to grow their money, because no tax is paid on returns made on any money held within an ISA.