On Wednesday 26 March, Chancellor Rachel Reeves held her first Spring Statement. Committing to a single “fiscal event” per year, the Chancellor used her Statement to provide an update on the government’s spending plans, accompanied by a fiscal forecast from the OBR.
We did not expect many significant tax changes or announcements in the Spring Statement, and from that perspective, it did not disappoint. Instead, pledging to secure Britain’s future and boost economic growth, the Chancellor announced a raft of spending measures that she says will boost the UK economy by 1.0% this year. The lack of tax announcements does however increase the spotlight on the changes announced in the Autumn Budget 2024, and turns the eye to ‘what’s next’.
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Instead, pledging to secure Britain’s future and boost economic growth, the Chancellor announced a raft of spending measures that she says will boost the UK economy by 1.0% this year.
A welcome piece of last-minute news for the Chancellor prior to the Spring Statement, was that UK inflation unexpectedly fell in February to 2.8% according to data released by the Office for National Statistics, below the forecasted 2.9% by economists polled by Reuters. The fall in inflation could be attributed to a decline in clothes prices which fell 0.6% in the 12 months to February.
However, services inflation held strong at 5.0%, reiterating that price pressures are still prevalent and the Bank of England will continue its slow approach to the reduction in interest rates.
Following the Spring Statement, the Office for Budget Responsibility said last year’s changes to planning policies by the Labour government would boost house building and property transactions. The OBR has forecast 1.3million net additional homes by 2029, however, despite the figure of 305,000 homes a year being the highest rate in decades, this still falls short of Prime Minister Sir Keir Starmer’s target of 1.5million net additional homes overall. The OBR has said the impact of the overall changes would bring down the average house price by 0.8% in 2029.
Our specialist's final thought
"The OBR has forecast 1.3million net additional homes by 2029, however, despite the figure of 305,000 homes a year being the highest rate in decades, this still falls short of Prime Minister Sir Keir Starmer’s target of 1.5million net additional homes overall."
