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Spring Statement missed the mark for small businesses
C hancellor of the UK Government, Rachel Reeves, presented her Spring Statement to Parliament at the end of March.
The Office for Budget Responsibility has downgraded the UK’ s economy growth forecast to 1.0 % in 2025, which is lower than the 2.0 % predicted in October. But growth is then forecast to accelerate to 1.9 % in 2026 and every year thereafter. Cumulative growth across the forecast period( Q4 2024 – Q1 2030) is now expected to be 9.4 %, compared to 9.2 % in the OBR’ s October forecast.
Reeves also said that the government is driving ambitious reforms to create a more pro-work welfare system for those who can work and to protect those who cannot. These reforms put welfare spending on a more sustainable trajectory, with the OBR confirming that they will save £ 4.8 billion from the welfare budget in 2029 – 30 and that welfare spending will fall as a share of GDP in the medium-term.
Reeves also committed to increase NATO-qualifying defence spending to 2.5 % of Gross Domestic Product( GDP) by 2027, including by providing an additional £ 2.2 billion of funding for the Ministry of Defence( MOD) next year.
The OBR says that the planning reforms included in the government’ s National Planning and Policy Framework( NPPF) will lead to 170,000 additional homes built over the forecast period. This increases the level of real GDP by 0.2 % by 2029-30, adding £ 6.8 billion to the economy, and by over 0.4 % in 2034 – 35. our economy, but the Spring Statement missed the mark.
“ Our real-time employment data shows employment shrinking by 0.4 % in February, with overall employment trending downwards since October, when the Chancellor announced an increase in employer National Insurance Contributions. This change alone will cost businesses £ 900 more annually per employee on a median wage.
“ Instead of addressing these challenges, the government is pushing policies that make it harder for SMEs to grow and hire. While we understand the fiscal challenges and see the case for benefit reform, the government hasn’ t yet put these changes together in a way that works for businesses.
“ Providing targeted support to SMEs that hire people coming off long-term benefits would benefit both businesses and the economy. Without meaningful intervention, we risk further job losses, particularly among our youth where NEET numbers already approach 1 million.”
Managing Director of Aurora Capital, George Holmes, said:“ The Spring Statement delivered few surprises, but for small businesses, that’ s part of the problem. With no new tax or spending support announced, and inflation now down to 2.8 %, many SMEs will feel this was a missed opportunity to help them weather the cost pressures they’ re still facing.
“ Employment costs are set to rise significantly in April, with higher National Insurance Contributions and the increase to the National Living Wage kicking in. Yet, despite clear warnings from business groups, there was no new support to ease the pressure on small employers; no targeted reliefs, no funding boosts and no signal of short-term help with borrowing costs.
“ If the government is serious about making the UK the best place to start and scale a business, it needs to do more than talk about long-term stability. Small businesses are ready to drive growth, but they can’ t do it on their own.” �
Kevin Fitzgerald, UK MD, Employment Hero, an payroll and employment platform, said:“ The government had an opportunity to support the small businesses that are the backbone of
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