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Spring Forecast: How will the Chancellor balance the books?

25th March 2025

Can the Chancellor improve the gloomy economy?

Ahead of the Spring Forecast on Wednesday, the Chancellor Rachel Reeves MP has been doing the media rounds to manage expectations of how bad the Office of Budget Responsibility’s forecast on the economy will be.

Rachel Reeves has confirmed that she will not be raising taxes but will balance the books by making cuts to spending across Government departments – including a 15% cut to Civil Service running costs. She is also planning a £3.25bn “spend to save” fund that Government Departments will pitch money saving ideas to, such as investment in AI to yield specific efficiency savings. This is understood to include spending £100m on 500 more HMRC compliance officers and £80m to employ more third-party collectors of tax debts.

Another “spend to save” move could involve ending the £800m a year Digital Services Tax (DST) as part of negotiations on USA trade tariffs due to be imposed next week. This could be a small price to pay to help protect UK businesses exporting to the US.

As expected, the Chancellor has also trailed “good news” ahead of the Forecast by announcing some sector-led investments including:

• £150m a year to train the engineers, bricklayers, electricians and carpenters needed to build the 1.5m homes Labour has promised by 2029.
• £400m to fund cutting-edge technology development for the armed forces.

Keep up to date on Wednesday

We will track the key announcements and emerging tax news on our Spring Forecast hub.

Click here to read the full article.