reeves spring statement summary

We explore Reeves Spring Statement 2025 and what it means for UK Growth, Inflation and Rates.

What does Reeves Spring Statement mean for UK Growth, Inflation and Rates?

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​​This was a muted budget with a muted market response for bond yields and sterling. The downgrade to Growth from the October 2024 was well flagged and consistent with BoE forecasts. The upgrade to inflation was consistent with our expectations and concerns around “zombie inflation” which is down but not dead. We need to see UK returning to growth for borrowing and spending plans to remain digestible.
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• Growth 2025 Growth cut from 2% to 1% as expected.  Very slight upgrade to growth 2026-7
• Inflation 2025 Average inflation upgraded from 2.6% to 3.2% before trending down
• ​Rates glidepath slightly raised

 
Key points

• No tax changes (only one “fiscal event” per annum)
• Fiscal headroom or “buffer” (balance between spending and borrowing) maintained
• Welfare cuts to those with disabilities and long-term care conditions bring welfare spending down as a share of GDP
• Defence spending to increase to 2.5% of GDP from April 2027 funded by overseas aid cuts as previously flagged