The government has announced its Spring Forecast, normally known as the Spring Statement.
It’s being labelled as a ‘forecast’ because Labour want to do one fiscal event per year in the form of the Autumn Budget. They’re leaving this as just a forecast, an update on the state of the nation’s finances, according to the Treasury.
However, the government still have a significant financial hole to fill, so could pressure turn their hand? Well, Reeves has potentially already surpassed the ‘fiscal headroom’ of £9.9bn allocated by the OBR, making the chances of tax rises or spending cuts greater.
For some more background, feel free to read on. If you’d like to go straight to a particular section, use the navigation below.
- Fiscal rules and the latest data
- How are businesses feeling?
- The Spring Forecast 2025
- What should we expect for small businesses?
Fiscal rules and official data
The Chancellor has laid out her own set of fiscal rules to stick to, and if she deviates from them she may have to take other measures. Her fiscal rules are the following.
The stability rule: The current budget should be on course to be in balance or surplus by 2029/30
The investment rule: Net financial debt should fall as a share of the economy in 2029/30
Welfare cap: Some types of welfare must stay under a pre-specified level
The latest reports show the economy unexpectedly shrinking by 0.1 per cent in January 2025. In a knock to Reeves, the Bank of England has its reduced its growth estimate for the economy from 1.5 per cent to 0.75 per cent. The Office for Budget Responsibility (OBR) will be updating its growth forecast before the Spring Forecast announcement is made, which could shape the direction the announcement goes in.
Office for National Statistics (ONS) data shows that borrowing is running higher this year than predicted in last year’s Budget. In response to the figures, Isabel Stockton, senior research economist at the Institute of Fiscal Studies (IFS) said:
“[The] revenue data came in lower than forecast but doesn’t tell us a great deal about the overall fiscal outlook heading into the Spring Forecast. What the data do highlight is how much more the government plans to borrow this year relative to when Rachel Reeves took office as Chancellor.
“This extra borrowing in the short term is coupled with the promise of fiscal restraint in future, but it remains to be seen whether this will be enough to meet her ‘non-negotiable’ fiscal rules without further tax rises or even tighter spending plans. If – and it is still very much an if – the forecast moves against the Chancellor, she’ll face a truly unenviable set of choices – none of which are made easier by the upwards pressures on defence spending.”
How are businesses feeling?
You could certainly argue that the effect of the Autumn Budget is being felt by businesses. Government data on incorporated companies released today (March 6) reveals that the companies register shrank between October and December 2024. That’s the first time since quarterly records began in the period from April to June 2012. What’s more, there were 203,584 dissolutions in the UK between October and December 2024. That’s an increase of 40,132 (24.55 per cent) compared to the same period in 2023.
Jonathan Cooper, director and founder of The Director’s Helpline and The Director’s Choice, told Small Business about the effect that government policies are having on directors.
“As director of The Director’s Helpline, we speak to more than 600 directors each month who are seeking impartial advice and reassurance. The resounding message, heard time and time again since Rachel Reeves’ punishing Autumn Budget, is that many businesses are quite simply on the brink.
“The Chancellor has the opportunity later this month to make a real difference to business owners – to clarify measures outlined in the Budget and to refrain from any further tax rises. Business owners, particularly SMEs, need a lifeline. The £25 billion annual increase in employers’ National Insurance Contributions (NIC) has been incredibly damaging.
“My team and I speak to directors daily who simply can’t foresee a profitable future. We’re receiving a high volume of calls from business owners in sectors with lower paid workers, such as retail and hospitality, who are being forced to increase prices, reduce services, and make redundancies.
“According to the Insolvency Service, Creditors’ Voluntary Liquidation increased by 11 per cent in January from the previous year. Additional data suggests that approximately 172,000 UK jobs are at risk in 2025, too.
“Rachel Reeves has a golden opportunity on March 26 to reverse some of the damaging changes that will come into effect in April.”
The Spring Forecast 2025
Very little has been revealed at this stage, but we’ll update this article as we learn more.
When is the Spring Forecast 2025?
It will take place on March 26, 2025.
When will it start?
There isn’t a defined start time, but announcements like these usually happen after Prime Minister’s Questions which wraps up at 12:30pm. It’ll last around an hour.
Where will it be broadcast?
It will be broadcast live on the BBC and streamed on parliamentlive.tv.
What should we expect for small businesses?
Not much at the moment, in all honesty.
In better news, tax minister, James Murray, will announce on March 11 that people who run a side hustles and smaller businesses won’t be taxed until their income hits the £3,000 mark, up from the current £1,000.
And from April 6, company size thresholds will be changing, meaning that thousands of businesses will have fewer reporting and audit requirements. The government hopes that the changes will result in 113,000 small businesses and LLPs becoming microbusinesses; 14,000 shifting from medium-sized business to small and 6,000 moving from large to medium-sized. Reduction in reporting requirements.
The biggest change will be those moving from medium-sized to small businesses. They will no longer have to do a statutory audit of their annual accounts and from producing a strategic report. Meanwhile, those moving into the microbusiness category will be exempt from producing a directors’ report.
Aside from that, business rates will be a point of contention at the Spring Forecast. Business rates relief for retail, hospitality and leisure businesses will reduce from 75 per cent to 40 per cent after March 31 for the 2025/26 tax year, up to a cap of £110,000 per business. However, an overhaul in business rates is expected in 2026/27, with two permanent lower rates for leisure, retail and hospitality. Will there be something to tide them over in the meantime?
Given the hit that businesses took with Employers’ National Insurance (plus an increase to the National Minimum Wage from 1 April) it’s unlikely that they’ll be struck again, at least not in the same way.
Neil Insull, a partner at Blick Rothenberg, said: “Rachel Reeves has the opportunity to learn from the Budget and even seek to reverse some of the changes that will come into effect in April. While it seems certain that the employers NIC rate will increase to 15 per cent, a reversal of all or part of the reduction in the threshold at which employers pay NIC would be hugely welcomed, particularly for the high street, at a time when the National Living Wage is increasing and the promised cut in business rates will not come through until 2026.”
He added: “However, it is extremely difficult to see the Chancellor divert from Budget announcements in any significant way, particularly after publishing the Corporate Tax Road Map which emphasises the importance of fiscal certainty. The publication has been generally been applauded in the business community, albeit mainly by larger corporates who see the UK economy in competition with the rest of the world for their ‘business’.”
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