Rumours and predictions for what could be in the 2025 Spring Forecast

Although the Government has pledged to deliver “one major fiscal event a year to give families and businesses stability and certainty on upcoming tax and spending change”, Ms Reeves may be forced to make new announcements to ensure she sticks to her fiscal rules which were confirmed in the Autumn 2024 Budget and must be met by 2029-30:

• Stability rule: The current budget should be on course to be in balance or surplus.
• Investment rule: Net financial debt should fall as a proportion of GDP.
• Welfare gap: Welfare spending should remain below a pre-specified level.

Here are the rumours and predictions for what might be included in the forecast.

What is the Spring Forecast?

The Spring Forecast is Chancellor Rachel Reeves’ update on the state of the nation’s finances. It will take place on the same day as the Office of Budget Responsibility’s (OBR) latest economic and fiscal outlook is published.

When is the Spring Forecast?

Chancellor Rachel Reeves’ Spring Forecast takes place in the House of Commons on Wednesday, 26th March. The exact time has not yet been confirmed but statements are usually delivered at around 12.30pm after Prime Minister’s Question Time.

The forecast is in line with the Budget Responsibility and National Audit Act 2011 which requires the OBR to produce two forecasts each financial year.

Office of Budget Responsibility (OBR) forecast

Bloomberg claimed that a leak of data sent to Ms Reeves reveals that economic growth forecasts have been reduced by the OBR.

In addition, the Bank of England downgraded its growth estimate for the UK economy from 1.5% to 0.75%.

Alex Kerr, UK Economist at Capital Economics, said: “The OBR is likely to conclude that the Chancellor’s headroom against her fiscal rules has been wiped out and she will probably need to tighten fiscal policy as a result.”

Tax rises

A downgrading of growth forecasts could mean Ms Reeves may be forced into making more tax increases.

In the Autumn 2024 Budget, the Chancellor said the thresholds will rise with inflation from 2028-29, but she could extend the freeze beyond that point in the Spring Forecast.

According to the Institute for Fiscal Studies, freezing income tax thresholds after 2028-29 would generate around £3.5bn-£4bn a year if inflation is at least 2% and National Insurance thresholds are also frozen.

Although he implied they are unlikely, Prime Minister Keir Starmer has refused to rule out any tax increases in the Spring Forecast. He told reporters: “Obviously I am not going to get ahead of myself until we have made decisions.

“But as I have said before, in terms of the big decisions on tax obviously the Budget was the place that we took those decisions – but as ever, going into a statement I am not going to say in advance what we might do and what we might not do.”

A Treasury official told the Financial Times that “nothing is off the table”.

Reliefs for National Insurance changes

The controversial increase to employer’s National Insurance Insurance (NICs), announced at last year’s Autumn Budget, comes into force a week after the Spring Forecast. There has been strong criticism about the impact on employers’ costs and hiring plans from many businesses and the groups that represent them.

In research by the British Chambers of Commerce (BCC), 58% of firms said it will impact recruitment plans, with 54%, 36% and 30% saying it will affect prices, investment, and day-to-day operations.

Alex Veitch, BCC Director Of Policy, said: "The Government has pledged to retain the National Insurance tax position through the life of this Parliament, but our new evidence should give pause for thought.”

While the Chancellor is unlikely to reverse the increase, she might increase the Employment Allowance or introduce a higher threshold before employer’s NICs become payable. Some experts have also predicted that NICs relief for charities is a possibility.

Business rates reform

The Government has promised reforms to create “a fairer business rates system that protects the high street, supports investment, and is fit for the 21st century”. Among the changes are permanently cutting rates for retail and hospitality and leisure businesses from 2026.

A document published in February 2025 outlines the Government’s timetable for business rates reforms. More details might be included in the Spring Forecast.

Changes to ISAs

There is speculation that Ms Reeves may make changes to individual savings accounts (ISAs).

The current limit for cash ISAs is £20,000 and some experts have predicted that she might reduce the allowance to as low as £5,000, alongside maintaining or increasing the limit for stocks and shares ISAs.

Speaking to the Lords’ Financial Services Regulation Committee, City Minister Emma Reynolds said: “Why have we got hundreds of billions of pounds in cash ISAs? We have failed to drive an investment culture that we see in other places that allows people to invest their money. We’ve regulated so much that we’re not protecting consumers against inflation.

“We are starting to have a discussion with the regulators and with others about how we can create an investment culture.”

Consultations

Government responses to consultations and the launch of new calls for evidence may be included in the Spring Forecast, as has happened in previous statements.

Among the consultations that the Government is due to respond to are those on Financial Services Growth and Competitiveness Strategy and Options for Defined Benefit schemes.

As part of its corporate tax roadmap, published in October 2024, the Government said the following consultations will launch in Spring 2025 so they could be announced in the Spring Forecast:

• Consultation to review the effectiveness of Land Remediation Relief.
• Second-round consultation on reforms to the UK’s rules on transfer pricing, permanent establishments, and Diverted Profits Tax, including the potential removal of UK-to-UK transfer pricing.
• Consultations on potentially lowering the thresholds for exemption from transfer pricing and introducing a requirement for multinationals to report cross-border related party transactions to HMRC.
• Consultation on a new process that will give investors in major projects increased advance certainty.
• Consultation on widening the use of advanced clearances in the R&D reliefs.

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First published 3 Mar 2025

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